Income tax expense was $200 000 for the year.Income tax payable was $20 000 at the beginning and $30 000 at the end of the year.Cash payment for income tax reported on the cash flow statement using the direct method is:
A) $200 000.
B) $190 000.
C) $220 000.
D) $230 000.

Question

Quizplus · Accepted Answer

The cash payment for income tax can be calculated using the formula:

Income tax paid = Income tax expense - increase in income tax payable + decrease in income tax payable

Income tax paid = $200,000 - ($30,000 - $20,000)

Income tax paid = $200,000 - $10,000

Income tax paid = $190,000

Therefore, the correct answer is B.

Income Tax Expense Was $200 000 for the Year