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6. Deferred Income Taxes

12 Months Ended

Aug. 31, 2013

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:

	2013	2012


Computed tax at the federal statutory rate	$ 1,544,074	$ 1,646,365
State taxes, net of federal benefit	226,146	241,237
Depreciation	15,347	(3,266)
Inventory reserve	(4,167)	62,282
Deferred Gain – Land Sale	138,059	0
Other	13,447	13,445

Provision for income taxes	$ 1,932,906	$ 1,960,063

Current income taxes	$ 1,780,940	$ 1,903,774
Deferred income taxes	151,966	56,289
	$ 1,932,906	$ 1,960,063

Deferred income tax liability as of August 31, 2013 of $50,393 (August 31, 2012 – Deferred income tax asset of $101,573) reflect 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.

	2013	2012


Deferred tax assets:
Allowance for inventory	$ 82,087	$ 77,920
Allowance for bad debts	0	2,727
Difference between book and tax depreciation	5,579	20,926

Total deferred tax assets	87,666	101,573
Valuation allowance	0	0

Net deferred tax assets	$ 87,666	$ 101,573

Net deferred tax liability	138,059	0

Combined net deferred tax asset (liability)	$ (50,393)	$ 101,573

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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