Problem

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 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 teh end of 2016.