Dobson Corporation shows income tax expense of $90,000. There has been a $5,000 decrease in federal income taxes payable and a $7,000 increase in local income taxes payable during the year. What was Dobson's cash payment for income taxes?

Question

Quizplus · Accepted Answer

The cash payment for income taxes is calculated as follows:
Income Tax Paid = Income Tax Expense + Increase in Income Taxes Payable - Decrease in Income Taxes Payable
Income Tax Paid = $90,000 + $7,000 - $5,000
Income Tax Paid = $92,000 - $5,000
Income Tax Paid = $87,000
Therefore, the best answer is B, as it is the closest option to the calculated amount.

Dobson Corporation Shows Income Tax Expense of $90,000