Davis Company began manufacturing operations on January 2, 20X1. During 20X1 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:

20X2	$	7,500
20X3	$	2,500

The enacted tax rates are 21% for 20X1 and 20X2; and 25% for subsequent years.

If Davis paid no estimated taxes, income tax payable at the end of 20X1 is:

Multiple Choice

• $19,250.

• $21,000.

• $25,200.

• $15,570.