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The following information is provided for X Corporation for the year ending December 31, 2018: Book earnings...

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Accounting

The following information is provided for X Corporation for theyear ending December 31, 2018:

Book earnings before income taxes

$6,000

Tax exempt interest income

600

Taxes on foreign income above the U.S. statutory rate

200

State income taxes (before Federal benefit)

500

Annual increase in warranty reserve

200

Dividend received deduction on dividends from foreignsubsidiaries

600

Foreign tax credits available after the TCJA

400

Tax over book depreciation for 2018

500

Current year increase in valuation allowance

1,000

Entertainment expenses

400

Foreign derived intangible income (FDII) special deduction

600

X Corporation has not made an assertion under APB 23 that theirnon-U.S. undistributed earnings will be invested indefinitely orthat the earnings will be solely remitted in a tax-freeliquidation. The U.S. statutory rate is 21%. Based on all of theinformation presented, prepare an effective rate reconciliationshowing the dollar amount of each reconciling item (i.e. do notcombine potentially immaterial amounts) and the impact of eachreconciling item on the effective tax rate.

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