Assume the following facts for Munoz Company in 2013. Munoz reported pretax financial income of $800,000. In addition, Munoz reported the following differences between its pretax financial income and taxable income:

• Interest income of $80,000 was received during 2013 from an investment in municipal bonds. This income is exempt for tax purposes.

• Rent income of $40,000 was collected in 2012 and included for tax purposes during that year. For financial statement purposes, it will be reported as earned equally in 2013 and 2014.

• An asset with a 5-year life was purchased during 2013; straight-line depreciation for book purposes was $40,000. MACRS depreciation expense for 2013 was $100,000.

• Warranty expense of $20,000 was recognized on the 2013 income statement, while $5,000 was recognized for tax purposes. (Assume a 1-year warranty contract.)

The balance of the Deferred Tax Asset account (debit) at January 1, 2013, was $16,000 as a result of the rent income temporary difference. The tax rate for all years was 40%.Munoz has positive verifiable evidence of future taxable income.

Required:

1. Calculate the amount of Munoz's 2013 taxable income.

2. Prepare Munoz's income tax journal entry at the end of 2013.

3. Calculate Munoz's effective income tax rate for 2013.