Ming Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 30% of the current month’s net income. The income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter. The following information is available for the fourth quarter of year 2011. When tax computations are completed on January 20, 2012, Ming determines that the quarter’s Income Taxes Payable account balance should be $29,100 on December 31, 2011 (its unadjusted balance is $23,640).
October 2011 net income | $27,900 |
November 2011 net income | 18,200 |
December 2011 net income | 32,700 |
1.Determine the amount of the accounting adjustment (dated as of December 31, 2011) to produce the proper ending balance in the Income Taxes Payable account.
2.Prepare journal entries to record (a) the December 31, 2011, adjustment to the Income Taxes Payable account and (b) the January 20, 2012, payment of the fourth-quarter taxes.
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