For the year ended December 31, 2019, 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$60,000Depreciation deducted for tax purposes in excess of depreciation recorded on the books120,000Proceeds received from life insurance on death of an insured employee100,000Corporate tax rate for 201930%Enacted tax rate for future periods35% Required:1.Calculate taxable income and tax payable for tax purposes.2.Prepare Nelson’s income tax journal entry at the end of 2019.

Given information is: Income from Income Statement = $435,000

Answered: For the year ended December 31, 2019,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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For the year ended December 31, 2019, 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 2019	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 2019.

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