Ernie\'s Electronics reports income tax expense of $270,000. Income taxes payabl

Question

Ernie's Electronics reports income tax expense of $270,000. Income taxes payable at the beginning and end of the year are $56,500 and $68,000, respectively.

(Income Tax Expense - Decrease/Increase in income taxes payable.

B)

Analyze each of the four transactions Ernie’s Electronics had with Bert’s Bargain House from the perspective of Bert's Bargain House. Indicate in which section of the statement of cash flows each of these items would be reported for Bert's Bargain House: operating activities (indirect method), investing activities, financing activities, or a separate noncash activities note.

Ernie's Electronics reports income tax expense of $270,000. Income taxes payable at the beginning and end of the year are $56,500 and $68,000, respectively.

Explanation / Answer

Cash paid Income tax expenses during the year = Income tax exp current year + Income tax payable at the beginning - Income tax payable at the end

i.e = $ 270000+ $56500-$ 68000 = $ 258,500

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