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Unformatted text preview: Income before taxes $200,000 Less: income tax expense Current $59,200 Deferred 12,000 71,200 Net income $128,800 d. Reconcile the effective tax rate with the statutory rate of 40% US Federal Statutory Rate 40.00% Municipal bond interest revenue (-24,000/200,000)(.40) (4.80) Life insurance premiums (+9,000/200,000)(.40) 1.80 Dividend revenue exclusion (-7,000/200,000)(.40) (1.40) Effective tax rate 35.60% Calculation of Taxable Income from data and Income Before Tax amount of $200,000. Item Difference Depreciation-15,000 Warranty Expense +1,000 Installment Sales Revenue-22,000 Prepaid Rental Revenue +6,000 Municipal Bond Revenue-24,000 Life insurance Premiums +9,000 Dividend Revenue-7,000 Cumulative Difference-52,000 Income Before Tax $200,000 Taxable Income $148,000...
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This note was uploaded on 03/03/2012 for the course MGMT 351 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.
- Spring '08