Question

Marigold Corporation shows income tax expense of $81000. There has been a $5000 decrease in federal income taxes payable and a $8700 increase in state income taxes payable during the year. What was Marigold's cash payment for income taxes?

A. $94700
B. $76000
C. $77300
D. $81000

Answer 1

Marigold Corporation's cash payment for income taxes is calculated by adjusting the income tax expense with the changes in federal and state income taxes payable. The correct cash payment is C. $77,300,

Step-by-step explanation:

The student asked what Marigold Corporation's cash payment for income taxes was, given an income tax expense of $81,000, a $5,000 decrease in federal income taxes payable, and an $8,700 increase in state income taxes payable.

To calculate the actual cash payment for the income taxes, adjustments to the income tax expense must be made for the changes in tax payables. The cash payment can be figured out as follows:

• Income Tax Expense: $81,000
• Decrease in Federal Income Taxes Payable: $5,000 (add back this amount)
• Increase in State Income Taxes Payable: $8,700 (subtract this amount)

Therefore, the calculation for cash payment is $81,000 + $5,000 - $8,700 = $77,300,which includes adding back the decrease in federal taxes payable and subtracting the increase in state taxes payable from the income tax expense. The correct answer is C. $77,300.