Compute for the amount of bonus

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Reference no: EM132512633

An entity reports profit before bonus and taxes of 200,000 during the year. The entity has an established policy of paying its top management a 2% bonus on annual profit. The entity is subject to an income tax rate of 30%.

Requirements:

Question 1: Compute for the amount of bonus under each of the following bonus schemes.

A. Bonus is based on profit before deducting bonus and income tax.

B. Bonus is based on profit after deducting bonus but before deducting income tax.

C. Bonus is based on profit before deducting bonus but after deducting income tax.

D. Bonus is based on profit after deducting both bonus and income tax

Reference no: EM132512633

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