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6. Income Taxes

12 Months Ended

Aug. 31, 2018

Notes

6. Income Taxes

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:

	2018			2017
Computed tax at the federal statutory rate	$	1,083,541		$	1,516,880
State taxes, net of federal benefit		228,332			217,184
Depreciation		(20,036)			(22,800)
Inventory reserve		(22,956)			39,357
Other		19,394			7,982
Provision for income taxes	$	1,288,275		$	1,758,603
Current income taxes	$	1,288,275		$	1,758,603
Deferred income taxes		70,509			(20,009)
Total income tax expense	$	1,358,784		$	1,738,594

Deferred income tax liability as of August 31, 2018 of $81,853 (August 31, 2017 – $11,344) 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.

	2018			2017
Deferred tax assets:
Allowance for inventory	$	65,410		$	116,300
Allowance for bad debts		-			1,294
Difference between book and tax depreciation		(9,205)			9,121
Total deferred tax assets		56,206			126,715
Valuation allowance		-			-
Net deferred tax assets		56,206			126,715
Net deferred tax liability		(138,059)			(138,059)
Combined net deferred tax liability	$	(81,853)		$	(11,344)

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- 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.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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