Assume the following facts for Munoz Company in Year $5.$ 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 Year $5$ from an investment in municipal bonds. This income is exempt for tax purposes.

Rent income of $$40,000$ was collected in Year $4$ and included for tax purposes during that year. For financial statement purposes, it will be

reported as earned equally in Year $5$ and Year $6.$

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

expense for Year $5$ was $$100,000.$

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

warranty contract.$)$

The balance of the Deferred Tax Asset account $($debit$)$ at January $1,$ Year $5,$ was $$16,000$ as a result of the rent income temporary difference. The tax rate $40\%.$

Munoz has positive verifiable evidence of future taxable income.

Required:

Calculate the amount of Munoz's Year $5$ taxable income.

Prepare Munoz's income tax journal entry at the end of Year $5.$

Calculate Munoz's effective income tax rate for Year $5.$