Reconciling Effective and Statutory Tax Rate Rafting Inc. had pretax GAAP income of $100,000 and the statutory tax rate is 25%. Rafting Inc. has no temporary dierences, and so there is no deferred tax component to income tax expense. Rafting Inc. has the following permanent dierences. Interest revenue of $20,000 resulting from an investment in tax-exempt municipal bonds. Fines paid of $30,000 relating to several environmental laws that were violated. The fines are not tax-deductible.

a. Record the income tax expense journal entry. b. Prepare a reconciliation of the statutory tax rate to the effective tax rate. - Note: Use a negative sign to indicate a decrease. - Note: Enter the percent rounded to one digit after the decimal; for example, enter 8.4 for 8.44%, or 8.5 for 8.45%