Week 6 CPA Problems E18-11 Multiple Tax Rates

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-$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 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.