A corporation has a $40,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $47,000. The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Question

Quizplus · Accepted Answer

The entry suggested in the statement will bring the Income Tax Payable account balance to its actual liability of $47,000 by reducing the credit balance of $40,000 by debiting Income Tax Expense for $7,000 and crediting Income Taxes Payable for $7,000.

A Corporation Has a $40,000 Credit Balance in the Income