BCB Corporation has made 11 monthly payments totaling $160,000 for its estimated annual income tax. At year end, income tax expense for BCB Corporation amounts to $185,000. The adjusting entry will involve a:
A)debit to Income Tax Payable for $25,000.
B)debit to Income Tax Expense for $185,000.
C)debit to Income Tax Expense for $25,000.
D)credit to Income Tax Payable for $185,000.

Question

Quizplus · Accepted Answer

The correct adjusting entry is to recognize the additional income tax expense not yet accounted for. Since $160,000 has already been paid, the additional expense is $185,000 - $160,000 = $25,000. This is recognized by debiting Income Tax Expense and crediting Income Tax Payable.

BCB Corporation Has Made 11 Monthly Payments Totaling $160,000 for Its