Southlawn Inc.'s taxable income is computed as follows: $\begin{array}{llr}
\text { Book income before tax} &\$2,405,600\
\text {Net permanent differences } &(512,000)\
\text { Net temporary differences} &(189,000)\
\text { Taxable income} &\$1,704,600
\end{array}$
Using a 21% rate, compute Southlawn's tax expense per books and tax payable.

Question

Southlawn Inc.'s taxable income is computed as follows: $\begin{array}{llr}
  \text {  Book income before tax} &\$2,405,600\
 \text {Net permanent differences  } &(512,000)\
 \text {  Net temporary differences} &(189,000)\
 \text {  Taxable income} &\$1,704,600
\end{array}$
 Using a 21% rate, compute Southlawn's tax expense per books and tax payable.

Quizplus · Accepted Answer

Tax expense per books = Taxable income * Tax rate = 11eb660c_b253_33e3_b33b_69b3efdc9035_TB8325_00 * 21% = $397,656
Tax payable = Tax expense per books - any applicable tax credits/reductions
Since there is no mention of any tax credits/reductions, tax payable = tax expense per books = $397,656 - Option A

Southlawn Inc Using a 21% Rate, Compute Southlawn's Tax Expense Per Books