Dobson Corporation shows income tax expense of $80,000. There has been a $5,000 decrease in federal income taxes payable and a $7,000 increase in state income taxes payable during the year. What was Dobson's cash payment for income taxes?

Question

Quizplus · Accepted Answer

Dobson's cash payment for income taxes can be calculated using the formula:
Income tax expense - decrease in federal income taxes payable + increase in state income taxes payable = cash payment for income taxes
Substituting the given values, we get:
$80,000 - $5,000 + $7,000 = $82,000 - cash payment for income taxes
Rearranging and solving for cash payment, we get:
Cash payment for income taxes = $82,000 - ($80,000 - $5,000 + $7,000) = $78,000
Therefore, the best choice is B) $78,000.

Dobson Corporation Shows Income Tax Expense of $80,000