Solution for QID #33381: Mustard Company had depreciation for tax purposes in 2021 of | StudyHelpMe

Mustard Company had depreciation for tax purposes in 2021 of $30,000 but for book purposes only $20,000. Also in 2021, Mustard recognized a loss from a contingency amounting to $20,000 which the Internal Revenue Service does not allow until it actually occurs which is likely in 2022. Mustard also recognized $14,000 of interest income in its from its investments in tax exempt bonds which the Internal Revenue Service will never regard as income. Taxes paid in 2021 were $90,000 with a tax rate of 20%. a) Determine the financial accounting (book) income for 2021 b) Determine the tax expense for 2021. c) Determine Mustard's effective tax rate for 2021