Record the income tax expense journal entry

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Question - In 2020, Rafting Inc. had a pretax GAAP income of $60,000 and the federal statutory tax rate is 25%. Rafting Inc. has no temporary differences, and so there is no deferred tax component to income tax expense. However, Rafting Inc. has the following permanent difference items.

Interest revenue of $12,000 resulting from an investment in tax-exempt municipal bonds.

Fines paid $18,000 relating to several environmental laws that were violated. The fines are not tax-deductible

Record the income tax expense journal entry.

Prepare a reconciliation of the statutory tax rate to the effective tax rate.

Reference no: EM133177192

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