Gerde’s unadjusted trial balance dated December 31, year 1, reports Income Taxes Expense of $165,000 and Income Taxes Payable of $45,000. The company’s accountant estimates that income taxes expense for the entire year ended December 31, year 1, is $190,000.
a. Prepare the necessary adjusting entry for income taxes expense on December 31, year 1.
b. Determine the amount of income taxes payable reported in the balance sheet dated December 31, year 1.