Southlawn Inc.'s taxable income is computed as follows. $$\begin{array} { l r }
\text { Book income before tax } & \$ 2,405,600 \
\text { Net permarnent differences } & ( 512,000 ) \
\text { Net temporary differences } & ( 189,000 ) \
\text { Taxable incorne } & \$ 1,704,600
\end{array}$$ Using a 34% rate, compute Southlawn's tax expense per books and tax payable.

Question

Southlawn Inc.'s taxable income is computed as follows. $$\begin{array} { l r } 
\text { Book income before tax } & \$ 2,405,600 \
\text { Net permarnent differences } & ( 512,000 ) \
\text { Net temporary differences } & ( 189,000 ) \
\text { Taxable incorne } & \$ 1,704,600
\end{array}$$ Using a 34% rate, compute Southlawn's tax expense per books and tax payable.

Quizplus · Accepted Answer

Tax expense per books = Book income before tax * Tax rate
Tax expense per books = \$2,405,600 * 34% = \$817,904

Tax payable = Taxable income * Tax rate
Tax payable = \$1,704,600 * 34% = \$579,564

Therefore, the correct choice is A, as it matches both the tax expense per books and tax payable.

Southlawn Inc Using a 34% Rate, Compute Southlawn's Tax Expense Per Books