At the end of the year, the business owes its employees $58,300 for accumulated vacation and sick pay. This amount will be paid when employees actually take their vacations and time off for sick leave. No entry has been made for this accrued liability. What adjusting entry is made at the end of the year?
Based on the final determination of its federal income tax for the year, the business owes $431,500. During the year, it made $3,978,500 total installment payments towards its income tax, which were charged (debited) to its income tax expense account. The $431,500 balance still owed to the government will be paid when the business’s income tax return is filed later.
a. What adjusting entry is made at the end of the year?
b. What is the amount of income tax expense reported in its income statement for the year?