Prepare the journal entry to record income taxes

Reference no: EM13264855

Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $620,000 and with an expected useful life of four years and no residual value. For tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $720,000, which includes interest revenue of $16,000 from municipal bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 35%.

Prepare the journal entry to record income taxes.

Reference no: EM13264855

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