The work sheet of PSI Company shows Income Tax Expense of $9,000 and Income Tax Payable of $9,000 in the Adjustments columns.What will be the ultimate disposition of these items on the work sheet?

Question

Quizplus · Accepted Answer

Income Tax Expense is an expense and therefore it will appear on the Income Statement columns as a debit. Income Tax Payable is a liability and hence it will appear on the Balance Sheet columns as a credit. Therefore, Income Tax Expense will appear as a debit of $9,000 in the Income Statement columns and Income Tax Payable will appear as a credit of $9,000 in the Balance Sheet columns.

The Work Sheet of PSI Company Shows Income Tax Expense