Corporate taxes are due in four estimated quarterly payments on April 15, June 15, September 15, and December 15.

However, for the purposes of this ABC illustration, we will assume that estimates are not paid, and that the tax is paid in full

on the return's March 15, 2017 due date.

ABC's income tax rate is 35%. The entire year's income tax expense was estimated at the beginning of 2016 to be $108,000,

so January through November income tax expense recognized amounts to $99,000 (11/12 months).

Since we are assuming estimates are not made during the year, the balance in Income taxes payable represents

income tax accrued for January through November. Assume no deferred tax assets or deferred tax liabilities.

Based on the income before income taxes figure from the income statement, calculate and record December's income tax expense adjustment

so that the entire year's tax expense is correct (i.e. the difference between total income tax expense and the amount already accrued through November).

Income Statement

ABC Corporation
Income Statement
For the Year Ended December 31, 2016
	Sales Revenue		790,000
	Less: Cost of goods sold		$ (107,000)
	Gross Margin		683,000
	Operating Expense:
	Advertising Expense	9,240
	Bad debt expense	$ 75,000
	Depreciation expense	11,165
	Impairment loss expense	5,000
	Insurance expense	22,500
	Office expense	28,500
	Utilities expense	33,571
	Wages expense	66,150
	Loss on reduction of inventory to NRV	16,000
	Total operating expense		(267,126)
	Operating Income		415,874
	Other income/expense:
	Rent Revenue	4,500
	Interest Expense	(31,171)	(26,671)
	Income before taxes		389,203
	less: income tax expense		(99,000)
	Net income		$ 290,203