A corporation has a $42,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $50,000. The company should record an entry to debit Income Tax Expense for $8,000 and credit Income Taxes Payable for $8,000.

Question

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The adjustment increases the Income Tax Payable account to match the actual liability of $50,000 and recognizes the additional expense of $8,000 needed to accurately reflect the tax expense for the period.

A Corporation Has a $42,000 Credit Balance in the Income