A company reported annual income tax expense of $85,000. During the year, income tax payable increased from a $6,200 beginning balance to a $8,800 ending balance. How much is cash paid for income taxes during the year?

Question

Quizplus · Accepted Answer

The cash paid for income taxes is calculated by starting with the income tax expense ($85,000) and adjusting it for the change in income tax payable. The income tax payable increased by $2,600 ($8,800 - $6,200), which means the company paid $2,600 more in cash than the expense recognized. Therefore, cash paid for income taxes is $85,000 - $2,600 = $82,400.

A Company Reported Annual Income Tax Expense of $85,000