Mart's Boutique has sales of $820,000 and costs of $540,000. Interest expense is $36,000 and depreciation is $59,000. The tax ra
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Answer:
Effective accounting tax rate = 17.61%
Explanation:
given data
Pre Tax book income = $1,026,000
Reserve for warranties = $101,300
Tax depreciation = $206,500
Deduction inform of dividends received = $55,200
to find out
accounting effective tax rate
solution
we assume here tax rate is 21 %
So Taxable income will be here as
Taxable income = [ $1,026,000 + $101,300 ] - [ $206,500 + $55,200 ]
Taxable income = $1,127,300 - $261,700
Taxable income = $865,600
Tax @21% = $865,600 × 21%
Tax = $181,776
Effective accounting tax rate will be
Effective accounting tax rate =
Effective accounting tax rate = 17.61%