The company reported sales of $50,000. Other income statement items for the year were as follows:

Interest revenue from municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000

Depreciation expense (tax depreciation was $30,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Expenses not deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000

Warranty expenses (not deductible until actually provided;

$3,000 provided this year) . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000

The income tax rate is 35%.

(1) Compute the effective tax rate and

(2) Provide a reconciliation of the statutory tax rate of 35% to the effective tax rate.