Question

Conroy Company had sales of $50,000, increase in accounts payable of $4,000, decrease in accounts receivable of $3,000, tax expense of $5,000, and an increase in taxes payable of $1,000. What was the cash outflow for taxes?

Answer 1

Answer:

$4,000

Explanation:

The computation of the cash outflow for taxes is shown below:

= Tax expense - increase in taxes payable

= $5,000 - $1,000

= $4,000

We simply deduct the  increase in taxes payable from the tax expense so that the correct amount can come. We considered the tax related transactions only

All other information which is given is not relevant. Hence, ignored it