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6. Income Taxes

12 Months Ended

Aug. 31, 2019

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:

	2019			2018
Computed tax at the federal statutory rate	$	605,466		$	1,083,541
State taxes, net of federal benefit		173,114			228,332
Depreciation		920			(20,036)
Inventory reserve		20,458			(22,956)
Other		8,383			19,394
Provision for income taxes	$	808,341		$	1,288,275
Current income taxes	$	808,341		$	1,288,275
Deferred income taxes		(20,649)			70,509
	$	787,692		$	1,358,784

Deferred income tax liability as of August 31, 2019 of $61,204 (August 31, 2018 – $81,853) 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.

	2019			2018
Deferred tax assets:
Allowance for inventory	$	83,243		$	65,410
Allowance for bad debts		-			-
Difference between book and tax depreciation		(6,388)			(9,205)
Total deferred tax assets		76,855			56,206
Valuation allowance		-			-
Net deferred tax assets		76,855			56,206
Net deferred tax liability		(138,059)			(138,059)
Combined net deferred tax liability	$	(61,204)		$	(81,853)

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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://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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