Income tax was $400,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year. Cash payments for income tax reported on the cash flow statement using the direct method is

Question

Quizplus · Accepted Answer

The direct method requires reporting actual cash payments made during the year, not the income tax expense amount. 
Beginning income tax payable: $30,000
End income tax payable: $40,000
Cash payments for income tax: $400,000 - $30,000 + $40,000 = $410,000
Therefore, the correct option is B, which is the nearest option to $410,000.

Income Tax Was $400,000 for the Year