Southlawn Inc.'s taxable income is computed as follows. Using a 34% rate,compute Southlawn's tax expense per books and tax payable.

Question

Southlawn Inc.'s taxable income is computed as follows.   Using a 34% rate,compute Southlawn's tax expense per books and tax payable.

Quizplus · Accepted Answer

Taxable Income = $2,380,960
Tax Expense per books = $2,380,960 x 34% = $809,734.40
Deferred Tax Liability = ($2,380,960 - $950,000) x 21% = $284,974.40
Tax Payable = $809,734.40 - $284,974.40 = $524,760
Therefore, Tax expense per books = $809,734.40 - $524,760 = $643,974.40
Hence, the correct answer is A.