Nishi Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 30% of the current month’s net income. The income taxes are paid in the first month of each quaiter for the amount accrued for the prior quarter. The following infer- mation is available for the fourth quarter of year 2013. When tax computations are completed on January 20, 2014, Nishi determines that the quarter’s Income Taxes Payable account balance should be $28,300 on December 31, 2013 (its unadjusted balance is $24,690).

1. Determine the amount of the accounting adjustment (dated as of December 31, 2013) to produce the proper ending balance in the Income Taxes Payable account.
2. Prepare journal entries to record

(a) the December 31, 2013, adjustment to the Income Taxes Payable account and (/;) the January 20, 2014, payment of the fourth-quarter taxes

Transcribed Image Text:

October 2013 net income. November 2013 net income December 2013 net income. $28,600 19,100 34,600