For the year ended December 31, 2016, Nelson Co.’ s income statement showed income of $ 435,000 before income, tax expense. To compute taxable income, the following differences were noted: Income from tax exempt municipal bonds $ 60,000 Depreciation deducted for tax purposes in excess of depreciation recorded on the books 120,000 Proceeds received from life insurance on death of an insured employee 100,000 Corporate tax rate for 2016 30% Enacted tax rate for future periods 35%
Required:
1. Calculate taxable income and tax payable for tax purposes.
2. Prepare Nelson’s income tax journal entry at the end of 2016.