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.