Question

In 2020, Martinez Corporation had pretax financial income of $173,000 and taxable income of $118,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 20%.Compute the amount to be reported as income taxes payable at December 31, 2020.Income taxes payable at December 31, 2020

Answer 1

The correct answer is $23,600.

Step-by-step explanation:

According to the scenario, computation of the given data are as follows:

Pretax financial income = $173,000

Taxable income =$118,000

Tax rate = 20%

So, we can calculate the income taxes payable by using following formula:

Income taxes payable = Taxable income × Tax rate

= $118,000 × 20%

= $23,600

Hence, the amount to be reported as income taxes payable at December 31, 2020 is $23,600.