At their fiscal year end,Lorax Corp has an (unadjusted)$62,000 credit balance in their Income Tax Payable account.However,a review reveals that the actual liability is $70,000.Lorax Corp should prepare an adjusting entry to debit Income Tax Expense for $8,000 and credit Income Taxes Payable for $8,000.

Question

Quizplus · Accepted Answer

The adjusting entry correctly increases the Income Taxes Payable account to reflect the actual liability of $70,000 and records the additional expense of $8,000 to match expenses with revenues in the correct period.

At Their Fiscal Year End,Lorax Corp Has an (Unadjusted)$62,000 Credit