Davis Company began manufacturing operations on January 2, 2018. During 2018 Davis reported pre-tax book...
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Davis Company began manufacturing operations on January 2, 2018. During 2018 Davis reported pre-tax book income of $85,000 and had taxable income of $75,000. Davis had a temporary difference relating to a prepaid asset which will be expensed as follows for book purposes: 2019 $ 7,500 2020 $ 2,500 The enacted tax rates are 30% for 2018 and 2019; and 40% for subsequent years.
If Davis paid no estimated taxes, income tax payable at the end of 2018 is:
A) $22,500.
B) $30,000.
C) $36,000.
D) $27,500.
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