Williams Corporation shows income tax expense of $60,000. 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 Williams' cash payment for income taxes?

Question

Quizplus · Accepted Answer

The cash payment for income taxes is calculated by adjusting the income tax expense for changes in income taxes payable. Starting with the $60,000 expense, subtract the $5,000 decrease in federal taxes payable (since this means less cash was paid) and add the $7,000 increase in state taxes payable (since this means more cash was paid), resulting in a cash payment of $58,000.

Williams Corporation Shows Income Tax Expense of $60,000