Answer:
The Income tax payable is $19,000
Explanation:
The reason is that in the tax books the tax is calculated on the taxable from which can be calculated by following formula:
Taxable profits = Taxable Revenues - Taxable Costs
Here the taxable revenue is $220,000 and taxable costs are $125,000.
By putting the values, we have:
Taxable profits = $220,000 - $125,000 = $95,000
The tax payable is calculated by extracting a tax percentage of taxable profits
Tax Payable at the rate 20% = $95,000 * 20% = $19,000
