Accrued Income Tax

At the end of an accounting period one of the adjusting entries is to accrue for estimated income tax payable due on the profits of the business.

Suppose a business has an estimated annual income tax expense of 14,000. As the income tax is estimated, a demand for the amount has not yet been received and the expense has not been recorded in the accounting records.

Accrued Income Tax Journal Entry

At the end of the accounting period the business needs to accrue the estimated income tax expense due, the accrued income tax payable journal entry is as follows:

Accrued Income Tax Journal Entry
Account Debit Credit
Income tax expense 14,000
Income tax payable 14,000
Total 14,000 14,000

The Accounting Equation

The Accounting Equation, Assets = Liabilities + Owners Equity means that the total assets of the business are always equal to the total liabilities plus the owners equity of the business. This is true at any time and applies to each transaction. For this transaction the Accounting equation is shown in the following table.

Accrued Income Tax – Accounting Equation
Assets = Liabilities + Owners Equity
None = Income tax payable + Income tax expense
0 = 14,000 + -14,000

In this case the balance sheet liabilities (income tax payable) has been increased by 14,000, and the income statement has an income tax expense of 14,000. The expense reduces the net income, retained earnings, and therefore owners equity in the business.

Popular mdct.ru Examples

Another mdct.ru example for you to discover.

Accrued Income Tax November 6th, 2016Team

You May Also Like


Related pages


debit note issued by supplierjournal entry of prepaid expensesexamples of cash disbursementspetty cash debit or creditaccrual based accounting examplecalculating npv excelfob shipping point definitionhow to find notes payableaccrued expenses examplesannuity with growth formulawhat does nett 30 days meanfuture value of a lump sum formulaaccounts payable exam questionsadjusting journal entries exampleuses of retained earningsnet present value and profitability indexpurpose of preparing bank reconciliation statementwhat is contra entry give an examplecommon stockholder equitydepreciation reducing balance formulalabor quantity varianceconvert margin to markupcompound depreciation9 steps of accounting cycleaccounts recievable turnover ratiocompute cost of goods manufactureddiminishing balance method of depreciationrent accrual journal entryvariable manufacturing overheadcoupon bond calculationstep in accounting cycleexamples of comprehensive incomeavailable for sale securities accountingannuity due tableextended warranty accountingreconciliation sheet templatecommon sized income statementfixed assets turnover formulaincome projection templatecommon size income statementrules of bank reconciliation statementis bonds payable a current liabilitylifo reserveslearn accounting entriesexpense template for small businesspmt function excelbep analysis formulajournal entries for variancesaccounting equation expandedbookkeeping practice testexamples of capital receiptsan accounts receivable ledger issample excel balance sheetjournal entry for stock splitusing excel for bookkeepingchange in nwc formuladupont analysis equationaccrued expenses double entryhow to calculate markup and marginhow to improve total asset turnoverperpetual cash flowaccrued liabilities examplesentry for accrued incomehow to calculate receivable turnover ratiopresent value of a perpetuity that starts in the futureformat of cheque receiptwritten down method of depreciationconsignee accountbills receivable accountwhat is stockholders equity in accountingannuity present valueexcel calculate loan balancehow to do fifo methoddupont analysis calculatorfree petty cash log templateperpetuity formula exceldeferred credits