Polytechnic Corporation reported taxable income of $2,340,000 for the year ended December 31, 2013. The controller is unfamiliar with the required treatment of temporary and permanent differences in reconciling taxable income to pretax financial income and has contacted your firm for advice. You are given company records that list the following differences.
Tax depreciation in excess of book depreciation . . . . . . . . . . . . . . . . . . . . . . . . $310,000
Proceeds from life insurance policy upon death of officer. . . . . . . . . . . . . . . . . . 145,000
Interest revenue on municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,000
Instructions:
1. Compute pretax financial income.
2. Given an income tax rate of 35%, prepare the journal entry or entries to record income taxes for the year.
3. Prepare a partial income statement beginning with Income from continuing operations before income taxes.