Income tax expense was $137,500 for the year. The balance of the income tax payable account was $7,500 at the beginning of the year and $10,000 at the end of the year. Cash payments for income tax reported on the cash flow statement using the direct method equals:

Question

Quizplus · Accepted Answer

Using the formula "income tax expense - increase in income tax payable + decrease in income tax payable", we can calculate the cash payments for income tax as follows:

$137,500 - ($10,000 - $7,500) = $135,000

Therefore, the answer is D, $135,000.

Income Tax Expense Was $137,500 for the Year