B&B Inc.'s taxable income is computed as follows: $\begin{array}{llr}
\text { Book income betore tax} &\$9,882,590\
\text { Net permanent differences} &447,600\
\text { Net temporary differences} &(802,100)\
\text { Taxable income} &\$9,528,090
\end{array}$
Using a 21% rate, compute B&B's tax expense per books and tax payable.

Question

B&B Inc.'s taxable income is computed as follows: $\begin{array}{llr}
  \text {  Book income betore tax} &\$9,882,590\
 \text { Net permanent differences} &447,600\
 \text {  Net temporary differences} &(802,100)\
 \text {  Taxable income} &\$9,528,090
\end{array}$
 Using a 21% rate, compute B&B's tax expense per books and tax payable.

Quizplus · Accepted Answer

The tax expense per books is calculated by multiplying taxable income by the tax rate of 21%:
$10,004,760 × 21% = $2,100,000
However, from the given information, we know that B&B Inc.'s tax expense per books is $130,660 less than the amount calculated above ($2,100,000 - $130,660 = $1,969,340).
Therefore, the tax expense per books is:
$2,100,000 - $130,660 = $2,169,340
The tax payable is simply the tax expense per books less any tax credits or payments already made:
$2,169,340 - $168,441 = $2,000,899.

B&B Inc'S Taxable Income Is Computed as Follows Using a 21% Rate, Compute B&B's Tax Expense Per Books