Beane Corporation shows income tax expense of $82000. There has been a $6000 decrease in federal income taxes payable and a $7000 increase in state income taxes payable during the year. What was Beane's cash payment for income taxes?

Question

Quizplus · Accepted Answer

Beane Corporation's cash payment for income taxes can be determined using the formula:
Income tax expense = Taxes payable at the beginning of the year + Current year tax expense - Taxes payable at the end of the year
Here, Beane Corporation has shown income tax expense of $82000, and there has been a $6000 decrease in federal income taxes payable and a $7000 increase in state income taxes payable during the year. Using the above formula, we can calculate:
$82000 = Taxes payable at the beginning of the year + (Current year tax expense) - (Taxes payable at the end of the year)
$82000 = X + (X-($6000+$7000)) - X
$82000 = X - $13000
X = $95000
Therefore, Beane Corporation's cash payment for income taxes was $95000. The closest option is B, $81000, which is incorrect. The correct answer is $95000.

Beane Corporation Shows Income Tax Expense of $82000