The company reported sales of $60,000. Other income statement items for the year were as follows: Interest
Question:
Interest revenue from municipal bonds . . . . . . . . . . . . . . . . . . . . . $ 7,000
Depreciation expense (tax depreciation was $36,000) . . . . . . . . . . 25,000
Expenses not deductible for tax purposes . . . . . . . . . . . . . . . . . . . . 18,000
Warranty expenses (not deductible until actually provided;
$2,000 provided this year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
The income tax rate is 40%.
(1) Compute the effective tax rate and
(2) Provide a reconciliation of the statutory tax rate of 40% to the effective tax rate.
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Sales 60000 Add Interest revenue from municipal bonds 7000 67000 Deduct Deprecia...View the full answer
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Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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