Lou Ling, owner of Lou’s Lube, estimates that he will need $70,000 for new equipment in 7 years. Lou decided to put aside money
1 answer:
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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%