Hafnaoui Company reported pretax net income from continuing operations of $1,116,500 and taxable income of $687,500. The book-tax difference of $429,000 was due to a $247,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $99,000 due to an increase in the reserve for bad debts, and a $281,000 favorable permanent difference from the receipt of life insurance proceeds.

c. Compute Hafnaoui Company's effective tax rate.

d. Provide a reconciliation of Hafnaoui Company's effective tax rate with its hypothetical tax rate of 21 percent.

ETR reconciliation (in $)
Income tax expense at 21%
Income tax provision
ETR reconciliation (in %)
Hypothetical income tax rate	21.00	%
		%
Effective tax rate		%