Rowen, Inc. had pre-tax accounting income of $1,350,000 and a tax rate of 40% in 2013, its first year of operations. During 2013 the company had the following transactions:
- Received rent from Jane, Co. for 2014 48,000
- Municipal bond income 60,000
- Depreciation for tax purposes in excess of book depreciation 30,000
- Installment sales revenue to be collected in 2014 81,000
Required:
(a) Prepare a schedule starting with pretax financial income and compute taxable income.
(b) Prepare the journal entry to record income taxes for 2013.