Bainbridge Company uses the direct method in determining net cash provided by operating activities. The income statement shows income tax expense $75,000. Income taxes payable were $25,000 at the beginning of the year and $18,000 at the end of the year. Cash payments for income taxes are
A) $68,000.
B) $75,000.
C) $82,000.
D) $93,000.

Question

Quizplus · Accepted Answer

The cash payments for income taxes can be calculated by adjusting the income tax expense for the change in income taxes payable: $75,000 (income tax expense) + $25,000 (beginning payable) - $18,000 (ending payable) = $82,000.

Bainbridge Company Uses the Direct Method in Determining Net Cash