Molly Ellen, bookkeeper for Keystone Company, forgot to send in the payroll taxes due on April 20. She sent the payment November 12. The IRS sent her a penalty charge of 10% simple interest on the unpaid taxes of $4,600.
Calculate the penalty. (Remember that the government uses exact interest.) Refer to Days in a year table. (Do not round intermediate calculations. Round the answer to two decimal places. Omit the "$" sign in your response.)
Penalty $259.62 ± 0.01
Explanation:
Nov. 12 → 316
Apr. 20 → – 110
206
$4,600 × 0.10 × 206 = $259.62
365
To calculate the penalty, we need to determine the number of days between April 20 and November 12.
April has 30 days, so there are 10 days remaining in April after April 20.
May has 31 days.
June has 30 days.
July has 31 days.
August has 31 days.
September has 30 days.
October has 31 days.
November has 11 days until November 12.
Now, let's calculate the total number of days:
10 + 31 + 30 + 31 + 31 + 30 + 31 + 11 = 195 days
Next, we need to calculate the interest using the exact interest formula:
Interest = Principal x Rate x Time
The principal is $4,600, the rate is 10%, and the time is 195 days.
Interest = $4,600 x 0.10 x (195/365) = $247.39
Therefore, the penalty is $247.39.
To calculate the penalty, we need to use the formula for simple interest:
Interest = Principal x Rate x Time
In this case, the principal is $4,600 and the interest rate is 10%. We need to find the time the payment was late for, which can be calculated using the Days in a year table.
To calculate the number of days late, we subtract the payment date (November 12) from the due date (April 20):
Start Date: April 20
End Date: November 12
Counting the number of days between these two dates using the Days in a year table, we have:
- April: 30 days
- May: 31 days
- June: 30 days
- July: 31 days
- August: 31 days
- September: 30 days
- October: 31 days
- November: 12 days
Total Days: 196 days
Now, we need to calculate the time in years by dividing the total number of days by the number of days in a year. Assuming it is a non-leap year with 365 days:
Time = 196 days / 365 = 0.536164
Now, we can calculate the penalty:
Interest = $4,600 x 10% x 0.536164 = $247.88
Therefore, the penalty for late payment is $247.88.