Income Taxes

12 Months Ended

Aug. 31, 2012

Income Taxes

Income Tax Disclosure [Text Block]

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:

	2012	2011
Computed tax at the federal statutory rate	$  1,646,365	$   429,518
State taxes, net of federal benefit	241,237	40,164
Depreciation	(3,266)	18,456
Inventory reserve	62,282	15,365
Other	13,445	24,806
Provision for income taxes	$  1,960,063	$   528,309
Current income taxes	$  1,903,774	$   487,589
Deferred income taxes	56,289	40,720
	$  1,960,063	$   528,309

Deferred income tax assets as of August 31, 2012 of $101,573 (August 31, 2011 - $157,862) 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.

	2012	2011
Deferred tax assets:
Allowance for inventory	$     77,920	$   140,202
Allowance for bad debts	2,727	-
Difference between book and tax depreciation	20,926	17,660
Total deferred tax assets	101,573	157,862
Valuation allowance	-	-
Net deferred tax assets	$   101,573	$   157,862