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    Dog1937's Avatar
    Dog1937 Posts: 14, Reputation: 1
    New Member
    		  
    #1

    Nov 7, 2013, 12:54 PM
    Tax Expense and Taxes Payable
    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's Avatar
    Fidget1 Posts: 105, Reputation: 4
    Junior Member
    		  
    #2

    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.
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