Compute randolph company effective tax rate

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Question - Randolph Company reported pretax net income from continuing operations of $800,000 and taxable income of $500,000. The book-tax difference of $300,000 was due to a $200,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $80,000 due to an increase in the reserve for bad debts, and a $180,000 favorable permanent difference from the receipt of life insurance proceeds. Randolph Company's applicable tax rate is 34 percent.

Required -

a. Compute Randolph Company's effective tax rate.

b. Complete the reconciliation of Randolph Company's effective tax rate with its hypothetical tax rate of 34 percent.

Reference no: EM132449577

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