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Determine the Cash Paid for Taxes during the year, using the following information: Tax Expense:...

Question:

Determine the Cash Paid for Taxes during the year, using the following information:

Tax Expense: $100,000 for the year

Tax Payable at the beginning of the year: $73,000

Tax Payable at the end of the year: $19,000

Operating Cash Flow

While using the direct method, cash flow from operating activities is calculated by deriving all cash collections and all cash payments related to operating activities. While cash collections are from customers, cash payments include payments to suppliers, expenses, taxes and so on.

Answer and Explanation:


Computation of cash paid for taxes during the year:


Cash paid for taxes during the year = beginning taxes payable + tax expense for the year - closing taxes payable

= $73,000 + $100,000 - $19,000 = $154,000

Cash paid for taxes during the year = $154,000


Learn more about this topic:

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Operating Cash Flow: Definition & Examples

from Finance 101: Principles of Finance

Chapter 10 / Lesson 4
9.9K

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