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    Bonus Concept

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    Viñas, Diana L.
    This document discusses four different ways that a bonus can be calculated as a percentage of income and taxes: 1. As a percentage of income before bonus and before taxes. 2. As a percentage of income after bonus but before taxes. 3. As a percentage of income after bonus and after taxes. 4. As a percentage of income before bonus but after taxes. For each method, an example calculation is shown using an income of $6,550,000, a 5% bonus rate, and a 30% tax rate to demonstrate how the bonus and tax amounts would be determined.

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    Bonus Concept

    Uploaded by

    Viñas, Diana L.
    71 views2 pages
    This document discusses four different ways that a bonus can be calculated as a percentage of income and taxes: 1. As a percentage of income before bonus and before taxes. 2. As a percentage of income after bonus but before taxes. 3. As a percentage of income after bonus and after taxes. 4. As a percentage of income before bonus but after taxes. For each method, an example calculation is shown using an income of $6,550,000, a 5% bonus rate, and a 30% tax rate to demonstrate how the bonus and tax amounts would be determined.

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    This document discusses four different ways that a bonus can be calculated as a percentage of income and taxes: 1. As a percentage of income before bonus and before taxes. 2. As a percentage of income after bonus but before taxes. 3. As a percentage of income after bonus and after taxes. 4. As a percentage of income before bonus but after taxes. For each method, an example calculation is shown using an income of $6,550,000, a 5% bonus rate, and a 30% tax rate to demonstrate how the bonus and tax amounts would be determined.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    71 views2 pages

    Bonus Concept

    Uploaded by

    Viñas, Diana L.
    This document discusses four different ways that a bonus can be calculated as a percentage of income and taxes: 1. As a percentage of income before bonus and before taxes. 2. As a percentage of income after bonus but before taxes. 3. As a percentage of income after bonus and after taxes. 4. As a percentage of income before bonus but after taxes. For each method, an example calculation is shown using an income of $6,550,000, a 5% bonus rate, and a 30% tax rate to demonstrate how the bonus and tax amounts would be determined.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    BONUS CONCEPT

    1. Bonus is expressed as a certain percent of income before bonus and before tax.

    2. Bonus is expressed as a certain percent of income after bonus and before tax.

    3. Bonus is expressed as a certain percent of income after bonus and after tax.

    4. Bonus is expressed as a certain percent of income before bonus and after tax.

    Income before tax and before Bonus 6,550,000

    Bonus 5%

    Income tax rate 30%

    1. BEFORE BONUS AND BEFORE TAX.


    Income before tax and before bonus 6,550,000
    × Bonus rate 5%
    BONUS 327,500

    2. AFTER BONUS AND BEFORE TAX.


    B = B% (Y – B) PROOF:
    B = .05 (6,550,000 – B) Income before tax and before bonus 6,550,000
    B = 327,500 – 0.05B
    Bonus (311,904.76)
    0.05B + B = 327,500
    1.05B = 327,500 Income after bonus and before tax 6,238,095.24
    B = 311,904.76 Bonus (x5%) 311,904.762

    3. AFTER BONUS AND AFTER TAX.


    B = B% (Y – B – T)
    T = T% (Y – B) PROOF:
    T = 0.30 (6,550,000 – B) Income before tax and before bonus 6,550,000
    B = 0.05 [6,550,000 – B – 0.30 (6,550,000 – B)]
    Bonus (221,497.58)
    B = 0.05 (6,550,000 – B – 1,965,000 + 0.30B)
    B = 327,500 – 0.05B – 98,250 + 0.015B Tax (1,898,550.73)
    B = 229,250 – 0.035B Income after bonus and after tax 4,429,951.69
    1.035B = 229,250
    Bonus (x5%) 221,497.58
    B = 221,497.58
    T = 0.30 (6,550,000 – 221,497.58)
    T = 0.30 (6,328,502.42)
    T = 1,898,550.73
    4. BEFORE BONUS AND AFTER TAX.
    B = B% (Y – T)
    B = .05 (6,550,000 – T)
    T = T% (Y – B) PROOF:
    T = 0.30 (6,550,000 – B)
    Income before tax and before bonus 6,550,000
    B = 0.05 [6,550,000 – 0.30 (6,550,000 – B)]
    B = 0.05 (6,550,000 – 1,965,000 + 0.30B) Tax (1,895,177.66)
    B = 229,250 + 0.015B Income before bonus and after tax 4,654,822.34
    0.985B = 229,250
    B = 232,741.12 Bonus (x5%) 232,741.12
    T = 0.30 (6,550,000 – 232,741.12)
    T = 0.30 (6,317,258.88)
    T = 1,895,177.66

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