Palm Corporation has book income of $424,000 after Federal income tax. Book net income reflects $130,000 federal income tax expense and $55,000 book depreciation expense. Tax depreciation expense computed under MACRS is $65,000 for tax purposes. Palm received $25,000 of prepaid rent not included in book income. Based only on these items, compute Palm's taxable income.

Required prepare the necessary adjusting entries in the general journal as of december 31, assuming the following: on september 1, the company entered into a prepaid equipment maintenance contract. birch company paid $3,400 to cover maintenance service for six months, beginning september 1. the payment was debited to prepaid maintenance. supplies on hand at december 31 are $3,900. unearned commission fees at december 31 are $7,000. commission fees earned but not yet billed at december 31 are $3,500. (note: debit fees receivable.) birch company's lease calls for rent of $1,600 per month payable on the first of each month, plus an annual amount equal to 1% of annual commissions earned. this additional rent is payable on january 10 of the following year. (note: be sure to use the adjusted amount of commissions earned in computing the additional rent.)