Assume the following facts for Munoz Company in 2019. 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 2019 from an investment in municipal bonds. This income is exempt for tax purposes.
• Rent income of $40,000 was collected in 2018 and included for tax purposes during that year. For financial statement purposes, it will be reported as earned equally in 2019 and 2020.
• An asset with a 5-year life was purchased during 2019; straight-line depreciation for book purposes was $40,000. MACRS depreciation expense for 2019 was $100,000.
• Warranty expense of $20,000 was recognized on the 2019 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, 2019, 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 2019 taxable income.
2. Prepare Munoz’s income tax journal entry at the end of 2019.
3. Calculate Munoz’s effective income tax rate for 2019.