Financial Accounting question
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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.