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Financial Accounting question

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Intern
Joined: 22 May 2018
Posts: 3
Financial Accounting question  [#permalink]

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02 Jul 2018, 09:27
Hi guys,

Not a GMAT question, but I cannot figure out this very basic q and wanted some help.

Carlita began 2014 with a taxes payable account balance of \$3,000. On December 31, 2014, its taxes payable account balance is \$7,000. How much did Carlita pay to the tax authorities during the year?

A. 2,000
B. 4,000
C. 6,000
D. Cannot be determined

Income statement:
Sales.........120,000
Less COGS.........90,000
Gross Margin.........30,000

Less Operating Expenses 10,000
Operating Income.......20,000

Less Interest Expenses.......2,000
Income before Taxes..... 18,000

Less income expense......6,000
Net income....... 12,000

So I initially thought it would be 6,000 because that's reported on the income statement-- that's what she actually paid in taxes right? I believe the answer is supposed to be 2,000.
Director
Joined: 30 Jan 2016
Posts: 834
Location: United States (MA)
Financial Accounting question  [#permalink]

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03 Jul 2018, 09:18
Hi tumpti,

Should be 2,000.

3,000+6,000 - X = 7,000 => X=2,000
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Financial Accounting question &nbs [#permalink] 03 Jul 2018, 09:18
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Financial Accounting question

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