Income Tax Expense for 2016 is $43,000.Income Tax Payable increased $5,000 during the year.Interest Payable increased $7,000 during the year.What is the cash paid for income taxes?

Question

Quizplus · Accepted Answer

The cash paid for income taxes is calculated by adjusting the income tax expense for changes in income tax payable. Since Income Tax Payable increased by $5,000, it means that $5,000 of the expense was not paid in cash. Therefore, cash paid for income taxes = Income Tax Expense - Increase in Income Tax Payable = $43,000 - $5,000 = $38,000.

Income Tax Expense for 2016 Is $43,000