Required

Determine the financial accounting (book) income for 2021 

Determine the tax expense for 2021. 

Determine Collard's effective tax rate for 2021

Collard Company had depreciation for tax purposes in 2021 of $25,000 but for book purposes only $20,000. Also in 2021, Collard recognized a loss from a contingency amounting to $30,000 which the Internal Revenue Service does not allow until it actually occurs which is likely in 2022. Collard also recognized $14,000 of interest income from its investments in tax exempt bonds which the Internal Reveunue Service will never regard as income. Taxes paid in 2021 were $125,000 with a tax rate of 20%.