Income tax expense for 2018 is $43,000. Income tax payable increased $5000 during the year. Interest payable increased $4000 during the year. What is the cash paid for income taxes?

Question

Quizplus · Accepted Answer

The cash paid for income taxes is calculated by adjusting the income tax expense for changes in income tax payable. Since income tax payable increased by $5,000, it means that $5,000 of the expense was not paid in cash. Therefore, cash paid for income taxes = $43,000 (expense) - $5,000 (increase in payable) = $38,000.

Income Tax Expense for 2018 Is $43,000