Pretax accounting income is $206,000. Depreciation for tax is $111,000; depreciation for accounting is $29,000. Bad debt expense for tax is $12,000; bad debt expense for accounting is $9000. A fine for pollution of a river was imposed by the state of Kentucky for $7000. The tax rate is 20%.

1. Taxable income is

1. $292,000
2. $128,000
3. $114,000
4. $134,000

2. The deferred tax liability is

1. Increased by 82,000 x .20
2. Reduced by $111,000 x .20
3. Increased by $29,000 x .20
4. Reduced by $82,000 x .20

3. The deferred tax asset is

1. Increased by $3000 x .20
2. Increased by $9000 x .20
3. Decreased by $12,000 x .20
4. Decreased by $3000 x .20

4. Which of the following is true?

1. Income tax expense is 206,000 x .2
2. The current portion is 206,000 x .20

c. Income tax expense is less than the current portion.

d. Income tax expense is more than the current portion.

5. Which of the following is true?

1. The effective tax rate is less than 20%.
2. The effective tax rate is more than 20%.
3. The effective tax rate equals 20%.
4. The effective tax rate cannot be determined from the information given.