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Nishi Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 32% of the current month's net income. The income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter. The following information is available for the fourth quarter of the year just ended. When tax computations are completed on January 20 of the following year, Nishi determines that the quarter's Income Taxes Payable account balance should be $35,716 on December 31 of the year just ended (its unadjusted balance is $31,216).

Nishi Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 32% of the current month's net income. The income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter. The following information is available for the fourth quarter of the year just ended. When tax computations are completed on January 20 of the following year, Nishi determines that the quarter's Income Taxes Payable account balance should be $35,716 on December 31 of the year just ended (its unadjusted balance is $31,216).

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Nishi Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 32% of the current month's net income. The income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter. The following information is available for the fourth quarter of the year just ended. When tax computations are completed on January 20 of the following year, Nishi determines that the quarter's Income Taxes Payable account balance should be $35,716 on December 31 of the year just ended (its unadjusted balance is $31,216). October net income November net income December net income $ 35,000 22,750 39,800 1. Determine the amount of the accounting adjustment (dated as of December 31) to get the correct ending balance in the Income Taxes Payable account. 2. Prepare journal entries to record (a) the December 31 adjustment to the Income Taxes Payable account and (b) the later January 20 payment of the fourth-quarter taxes. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the amount of the accounting adjustment (dated as of December 31) to get the correct ending balan Income Taxes Payable account. Note: Round intermediate calculations to the nearest whole dollar amount. Amount of accounting adjustment
Transcribed Image Text:Nishi Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 32% of the current month's net income. The income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter. The following information is available for the fourth quarter of the year just ended. When tax computations are completed on January 20 of the following year, Nishi determines that the quarter's Income Taxes Payable account balance should be $35,716 on December 31 of the year just ended (its unadjusted balance is $31,216). October net income November net income December net income $ 35,000 22,750 39,800 1. Determine the amount of the accounting adjustment (dated as of December 31) to get the correct ending balance in the Income Taxes Payable account. 2. Prepare journal entries to record (a) the December 31 adjustment to the Income Taxes Payable account and (b) the later January 20 payment of the fourth-quarter taxes. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the amount of the accounting adjustment (dated as of December 31) to get the correct ending balan Income Taxes Payable account. Note: Round intermediate calculations to the nearest whole dollar amount. Amount of accounting adjustment
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