6. Income Taxes

12 Months Ended

Aug. 31, 2021

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:

	2021		2020
Computed tax at the federal statutory rate	$	928,062	$	807,223
State taxes, net of federal benefit		204,632		218,611
Depreciation		(47,828)		(33,518)
Inventory reserve		3,665		7,587
Other		(139,269)		68,980
Provision for income taxes	$	949,262	$	1,068,883
Current income taxes	$	949,262	$	1,068,883
Deferred income taxes		19,993		35,748
	$	969,255	$	1,104,631

Deferred income tax liability as of August 31, 2021 of $116,945 (August 31, 2020 – $96,952) 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. 63854

	2021		2020
Deferred tax assets:
Allowance for inventory	$	97,678	$	92,999
Allowance for bad debts		-		-
Difference between book and tax depreciation		(113,421)		(51,892)
Total deferred tax assets		(15,743)		41,107
Valuation allowance		-		-
Net deferred tax assets		(15,743)		41,107
Net deferred tax liability		(101,202)		(138,059)
Combined net deferred tax liability	$	(116,945)	$	(96,952)