B&B Inc.'s taxable income is computed as follows. $$\begin{array} { l r }
\text { Book income before tax } & \mathbf { \$ 9 , 8 8 2 , 5 9 0 } \
\text { Net permarnent differences } & 447,600 \
\text { Net temporary differences } & ( 802,100) \
\text { Taxable income } & \$ 9,528,090
\end{array}$$ 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. $$\begin{array} { l r } 
\text { Book income before tax } & \mathbf { \$ 9 , 8 8 2 , 5 9 0 } \
\text { Net permarnent differences } & 447,600 \
\text { Net temporary differences } & ( 802,100) \
\text { Taxable income } & \$ 9,528,090
\end{array}$$ Using a 34% rate, compute B&B's tax expense per books and tax payable.

Quizplus · Accepted Answer

The formula for tax expense per books is book income before tax multiplied by the tax rate. Therefore, tax expense per books is $9,882,590 x 34% = $3,360,081
The formula for tax payable is taxable income multiplied by the tax rate. Therefore, tax payable is $9,528,090 x 34% = $3,239,551 
Therefore, the correct choice is B as it matches the calculated tax expense per books and tax payable.

B&B Inc'S Taxable Income Is Computed as Follows Using a 34% Rate, Compute B&B's Tax Expense Per Books