Kline Company, an accrual basis calendar year corporation, reported $560,000 net income before tax on its financial statements prepared in accordance with GAAP for 2011. Kline's records reveal the following information: (Kline's MTR is 35%. and all items have been properly reported under GAAP).
. The allowance for bad debts as of January 1, 2011 was $80,000. Write-offs for the year totaled $40,000, and the addition to the allowance for the year was $35,000. The allowance as of December 31 was $75,000.
. Kline paid a $65,000 fine to the state of Delaware for a violation of state pollution control laws.
. Kline's lawyers established an estimated fund for a pending lawsuit, which they expect to cost the company $125,000. This liability meets the fixed and determinable standard relating to contingent liabilities. under GAAP
. Kline received $85,000 in Municipal Bond interest that is not taxable.
Kline had tax depreciation of $89,000 and book depreciation of $74,000
Compute Kline's taxable income, and prepare the required journal entry to record the tax expense, tax payable and deferred account, if any.