Busch has gathered these data about her finances:

Ms. Busch has gathered these data about her finances:

Salary 140,000

Taxable interest received 2,500

Municipal bond interest received 15,000

Total itemized deductions 8,000

The personal exemption is $3,700.   The standard deduction for a single filer is $5,800. Use the rate schedule in Figure 9—2 to compute the following:

a.      Her tax

b.     Her average effective tax rate

c.      Her average tax rate

d.     Her marginal tax rate

e.     Her accountant discovers a previously omitted personal deduction of $800. By how much does her federal tax liability fall with that addition?

f.       Amazingly enough, the accountant now discovers a $250 credit omitted from previous calculations (but after discovering the $800 in part e). By how much does her federal tax liability fall because of this credit?

Figure 9—2 Federal Rate Schedule for 2011

Single Filers  

If Taxable Income Is:                                    Then Tax Is:

$0 - 8,500                                                            10% of the amount over $0

8,500 - 34,500                                                    $850 + 15% of the amount over $8,500

34,500 - 83,600                                 4,750 + 25% of the amount over $34,500

83,600 - 174,400                                               17,025 + 28% of the amount over $83,600

174,400 - 379,150                                             42,449 + 33% of the amount over $174,400

379,150 and over                                             110,016.50 + 35% of the amount over $379,150

**PLEASE SHOW THE WORK/EXCEL FORMULAS ON HOW YOU GET YOUR ANSWERS**