ZZZ Corporation's income statement shows a provision for income taxes of $65 million in 2014.At the end of 2013,ZZZ's balance sheet reported income taxes payable of $12 million and deferred taxes of $18 million.At the end of 2014 their balance sheet shows income taxes payable of $15 million and deferred taxes of $17 million.What were ZZZ's taxes paid in 2014?
A) $61 million
B) $63 million
C) $65 million
D) $67 million
E) $69 million

Question

Quizplus · Accepted Answer

The taxes paid in 2014 can be calculated as follows:
Income taxes payable at end of 2013: $12 million
+ Provision for income taxes in 2014: $65 million
= Total taxes payable in 2014: $77 million
Deferred taxes at end of 2013: $18 million
- Deferred taxes at end of 2014: $17 million
= Change in deferred taxes: $1 million (deferred taxes decreased)
Therefore, taxes paid in 2014 = Total taxes payable in 2014 - Change in deferred taxes
= $77 million - $1 million
= $76 million
So, the closest option is B) $63 million.

ZZZ Corporation's Income Statement Shows a Provision for Income Taxes