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income tax

This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.

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April 30, 2018 at 10:21 pm #449568
krisi
Member
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Hello,
there is a debit balance relating to income tax of 500 included in the trial balance. It is estimated that the income tax liability for the year is 8000. What amount should be included in SOFP and SOPL?
A debit balance means that the state owes us money and it must reduce our liability by 500 = 7500 which must appear in SOPL as an expense. The answer is 8500..
May 1, 2018 at 6:09 am #449604
John Moffat
Keymaster
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It is difficult to give a precise answer without seeing the full question.
However the balance presumably relates to the tax expense account, in which case it is not a receivable but is an expense.
An extra liability for this year of 8,000 brings the total to 8,500.
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