Based on its income for the month,a company estimates that it will owe $23,000 of federal income taxes for the month of May.What is the effect of the adjustment on the financial statements?

Question

Quizplus · Accepted Answer

The adjustment of estimating $23,000 of federal income taxes for the month of May will increase the income taxes expense, reducing net income for the month. This will not affect stockholders' equity or retained earnings and will increase the income taxes payable.

Based on Its Income for the Month,a Company Estimates That