I'm doing year end adjusting entries.

Question #1
Bad Debt expense for the year totals $2,900

So would I Debit the Bad Debt Expense acct $2900
and credit the Allow of doubtful acct $2900

Question #2

The income tax rate is 20% and the income taxes are payable in the first quarter of 2009

Debit Income tax expense
Credit Income tax payable

How do you get the income tax amount?

If I do an income statement the net income amount is $18,450
Would I multiply $18,450 x 20% = $3,690 is that the amount of tax?

Thank you for your help.

J

How do you get the income tax amount?

If I do an income statement the net income amount is $18,450
Would I multiply $18,450 x 20% = $3,690 is that the amount of tax?

Thank you for your help.


Income tax is determined on the income earned after charging interest. If the net income of $18,450 is after interest, then the calculation is correct, ignoring the implications of deferred taxation.