Required

Determine the financial accounting (book) income for 2021 

Determine the tax expense for 2021. 

Determine Collard's effective tax rate for 2021

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Collard Company had depreciation for tax purposes in 2021 of $25,000 but for book purposes only $20,000. Also in 2021, Collard recognized a loss from a contingency amounting to $30,000 which the Internal Revenue Service does not allow until it actually occurs which is likely in 2022. Collard also recognized $14,000 of interest income from its investments in tax exempt bonds which the Internal Reveunue Service will never regard as income. Taxes paid in 2021 were $125,000 with a tax rate of 20%. Collard Company had depreciation for tax purposes in 2021 of $25,000 but for book purposes only $20,000. Also in 2021, Collard recognized a loss from a contingency amounting to $30,000 which the Internal Revenue Service does not allow until it actually occurs which is likely in 2022. Collard also recognized $14,000 of interest income from its investments in tax exempt bonds which the Internal Reveunue Service will never regard as income. Taxes paid in 2021 were $125,000 with a tax rate of 20%.

Answer rating: 100% (QA)

A To determine the financial accounting book income for 2021 we need to start with the pretax income ... View the full answer