6. INCOME TAXES
A reconciliation of the provision for income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes is as follows:
|
| 2017 |
| 2016 |
|
|
|
|
|
|
|
|
|
|
|
| $ 1,516,880 |
| $ 1,194,943 |
| Computed tax at the federal statutory rate | 217,184 |
| 169,869 |
| State taxes, net of federal benefit | (22,800) |
| (5,834) |
| Depreciation | 39,357 |
| 32,269 |
| Inventory reserve | 7,982 |
| 6,494 |
| Other |
|
|
|
|
| $ 1,758,603 |
| $ 1,397,741 |
| Provision for income taxes |
|
|
|
| Current income taxes | $ 1,758,603 |
| $ 1,397,741 |
| Deferred income taxes | (20,009) |
| (2,947) |
| Total income tax expense | $ 1,738,594 |
| $ 1,394,794 |
Deferred income tax liability as of August 31, 2017 of $11,344 (August 31, 2016 – $31,353) reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
|
| 2017 |
| 2016 |
|
|
|
|
|
|
|
|
|
|
| Deferred tax assets: |
|
|
|
| Allowance for inventory | $ 116,300 |
| $ 78,237 |
| Allowance for bad debts | 1,294 |
| - |
| Difference between book and tax depreciation | 9,121 |
| 28,469 |
|
|
|
|
|
| Total deferred tax assets | 126,715 |
| 106,706 |
| Valuation allowance | - |
| - |
|
|
|
|
|
| Net deferred tax assets | 126,715 |
| 106,706 |
|
|
|
|
|
| Net deferred tax liability | (138,059) |
| (138,059) |
|
|
|
|
|
| Combined net deferred tax liability | $ (11,344) |
| $ (31,353) |