Question: 1. How would the tax accounts change if the temporary difference for the bad debt reserve was a decrease of $70,000 instead of $40,000? 2.

1. How would the tax accounts change if the temporary difference for the bad debt reserve was a decrease of $70,000 instead of $40,000?

2. What happens to the effective tax rate?
– Increases – Decreases – No Impact explain your answer.

3. How would the tax accounts change if there was $150,000 of tax-exempt income that was not taken into consideration?
What happens to the effective rate?
– Increases – Decreases – No Impact.

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