XYZ Limited has the following ledger account balances: Income tax payable opening balance $47,000; closing balance $29,000. The amount of tax expense accrued at the end of the year was $22,000. The amount that has been paid during the year to the taxation authorities for incomes taxes is:
A) $54,000.
B) $22,000.
C) $40,000.
D) $98,000.

Question

Quizplus · Accepted Answer

The amount of income tax paid during the year can be calculated as follows:

Income tax paid = Income tax payable opening balance + Tax expense accrued - Income tax payable closing balance 
Income tax paid = $47,000 + $22,000 - $29,000 
Income tax paid = $40,000

Therefore, the correct answer is choice C.

XYZ Limited Has the Following Ledger Account Balances: Income Tax