For the year ended December 31,2010,Mason Company has implemented an employee bonus program equal to 7% of Mason's net income,which employees will share equally.Mason's net income (pre-bonus)is expected to be $3,500,000,and bonus expense is deducted in computing net income.What is the amount that needs to be recorded for estimated bonus liability for 2010?
A)$245,000
B)$144,118
C)$228,972
D)$50,000
E)$125,000

Question

Quizplus · Accepted Answer

B=.07(3,500,000-B); B = 245,000-.07B, 1.07B = 245,000; B = 228,972 (rounded)

For the Year Ended December 31,2010,Mason Company Has Implemented an Employee