Question

Question3 3.5 pts The following selected account balances were taken from ABC Company's a ccounting records during 2018: January 1, 2018 December 31, 2018 Inventory Accounts payable Long-term notes payable Income tax payable Investments Accounts receivable Land Common stock Retained earnings 69,000 47,000 165,000 11,000 89,000 77,000 60,000 100,000 26,000 35,000 41,000 130,000 7,000 68,000 84,000 89,000 175,000 41,000 The following information was taken from ABC Company's 2018 income stat ement: Sales revenue Cost of goods sold Gain on sale of investments Income tax expense Net income $422,000 361,000 11,000 22,000 $ 50,000 cotculate the onount of cash paid for income taxes during 2018.

Answer 1

Two accounts would be required for calculating the cash amount of income taxes. These are income tax payable and income tax expense.

Cash amount for income taxes = Beginning income tax payable + Income tax expense – Ending income tax payable

                                                     = 11,000 + 22,000 – 7,000

                                                     = 33,000 – 7,000

                                                     = $26,000 (Answer)