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Dog1937
Nov 7, 2013, 12:54 PM
Having trouble with the following

Liabilities
Taxes Payable
December 31, 2004: $7,000

December 31, 2005: $9,400

Change: $2,400

S. Inc. recorded a 2005 tax expense of $3,000. What amount did it pay to the tax authorities during 2005?

A.$2,400
B. $7,000
C. $600
D.$5,400

I'm a bit lost on this one. I believe it was C however I feel like I may be incorrect. Any guidance would be appreciated.

Fidget1
Nov 9, 2013, 04:44 AM
You're correct. It is C.

S inc had an opening bal of $7000 and its tax recorded for the year was $3,000, making tax payable $10,000. As the closing balance is $9,400, it must've paid $600.