Tor Corporation is subject to income tax rates of 20 percent on its first $50,000 pretax income and 34 percent on amounts in excess of $50,000. Quarterly pretax accounting income for the calendar year is estimated by Tor to be as follows:
Quarter Estimated Pretax Income
First ............................ $20,000
Second ......................... 30,000
Third ........................... 60,000
Fourth ......................... 50,000
Total ........................... $160,000
No changes in accounting principles, discontinued items, or unusual or infrequently occurring items are anticipated for the year. The fourth quarter's pretax income is, however, expected to include $20,000 in dividends from domestic corporations, for which an 80 percent dividend-received deduction is available.
REQUIRED
1. Calculate the estimated annual effective tax rate for Tor Corporation for 2016.
2. Prepare a schedule showing Tor's estimated net income for each quarter and the calendar year 2016.