ABC Co. had pretax accounting income of $400,000 this year. This included an estimated expense of $5,000 for bad debts, which is not deductible on their tax return until they identify the uncollectible amounts. The accounting income also includes $1,000 interest earned on municipal bonds.

What is ABC's taxable income if these are the only book-tax differences?

What is ABC's tax payable to the government this year, if the tax rate is 35%?