Question

As of December 31 (the end of the accounting period), ABC Company has a profit before tax of $12,000. The company's tax rate is 25%. The adjustment will include a(n

Answer 1

Based on the information given the adjustment will include a(n: Debit, $3,000.

Adjustment

Since the Company has a profit before tax of $12,000 including a tax rate of 25% the adjustment will include and increase of $3,000 calculated as:

Adjustment=Profit before tax×Tax rate

Where:

Profit before tax=$12,000

Tax rate=25%

Adjustment=$12,000×25%

Adjustment=$3,000 increase

Inconclusion the adjustment will include a(n: Debit, $3,000.

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