Reference no: EM131732959

Question - Monroe company commences doing business on January 1, 2016. Its pretax accounting income for the year $400,000. An analysis of the accounting records reveals the following:

The company paid a penalty to the state of NEW YORK for failing to use the necessary antipollution devices on its factory. The penalty is of $30,000 was probably expensed for GAAP purposes, but will not be deductible for tax purposes.

Deprecation for GAAP purposes was computed using straight line and amounted to $50,000. For tax purposes, deprecation is $80,000 for tax purposes.

Pretax accounting income is $400,000 includes the penalty expense and straight line deprecation. The company's tax rate is 30%.

Based on the above information:

• Determine taxable income for 2016.
• Prepare the adjusting entry to record income tax expense, income tax payable, and any deferred tax items.