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$220 Given the selected income statement data for Gray Co., what was its effective tax rate for the year? Present your answer

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Answer #1

Calculation of income earned before tax

Sales $495

Less: Cost of goods sold $220

---------

Gross profit $ 275

Less: Salaries expense $62

------------

Profit before tax $ 213

Effective rate of tax = (Tax expenses / Profit before tax ) * 100

= (44 / 213 ) * 100

= 20.6%

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