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    JBarucca's Avatar
    JBarucca Posts: 1, Reputation: 1
    New Member
     
    #1

    Sep 22, 2009, 08:12 PM
    Year end Adjusting Entries
    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
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
     
    #2

    Sep 22, 2009, 10:09 PM

    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.

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