Florita Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes

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Florita Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 34% 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 year 2009. When tax computations are completed on January 20, 2010, Florita determines that the quarter’s Income Taxes Payable account balance should be $46,693 on December 31, 2009 (its unadjusted balance is $42,364).
October 2009 net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45,200
November 2009 net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,400
December 2009 net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
1. Determine the amount of the accounting adjustment (dated as of December 31, 2009) to produce the proper ending balance in the Income Taxes Payable account.
2. Prepare journal entries to record.
(a) The December 31, 2009, adjustment to the Income Taxes Payable account.
(b) The January 20, 2010, payment of the fourth-quarter taxes.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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