Choice "D" is correct. In order to calculate income tax expense on an interim statement, the appropriate methodology is to multiply year to date income by the effective tax rate and subtract from that the income tax expense recorded in the previous quarter. The total income for both quarters is $30,000 and the effective tax rate estimated as of the second quarter is 25%. Total tax expense is then estimated as $7,500 for both quarters, and with $1,500 already booked in the first quarter, that will leave $6,000 for the second quarter.
Choice "a" is incorrect. This choice incorrectly calculates second quarter income tax expense of $5,000 ($20,000 x 25%) and then subtracts income tax expense from the first quarter.
Choice "b" is incorrect. This choice does not account for the change in the tax rate that will need to be applied in the second quarter to first quarter income.
Choice "c" is incorrect. This choice does not subtract the $1,500 recorded in the first quarter.