Identify the journal entry required to correctly record the following transaction. Income tax for the year estimated.
A) Dr Income tax expense
Cr Retained profits
B) Dr Taxes payable
Cr Income tax expense
C) Dr Income tax expense
Cr Taxes payable
D) Dr Income tax expense
Cr Cash at bank

Question

Quizplus · Accepted Answer

Income tax for the year estimated is recorded as an expense under Income tax expense account and as a liability under Taxes payable account. Therefore, the correct journal entry would be to debit Income tax expense and credit Taxes payable account. Option C provides the correct accounts for the transaction.

Identify the Journal Entry Required to Correctly Record the Following