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

Question

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

Quizplus · Accepted Answer

To compute tax expense per books, we need to multiply the taxable income by the tax rate: 
$9,737,500 x 34% = $3,312,750.

However, we also need to adjust for any permanent differences between book income and taxable income. The problem does not provide any information regarding permanent differences, so we assume there are none. This means tax expense per books is equal to $3,312,750.

To compute tax payable, we need to multiply taxable income by the tax rate: 
$9,737,500 x 34% = $3,312,750.

However, we also need to adjust for any temporary differences between book income and taxable income. These differences will reverse in future years and create either a tax benefit or tax liability. The problem does not provide any information regarding temporary differences, so we assume there are none. This means tax payable is equal to $3,312,750.

Therefore, the best choice is B: Tax expense per books $3,512,265; tax payable $3,239,551.

B&B Inc'S Taxable Income Is Computed as Follows