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The tax charge for the year was estimated to be 390,000, inclusive of adjustment to deferred tax, The increase deferred tax provision was 50,000. The company paid tax of 400,000 on the current year’s estimated profit.
May i know how is the journal entry for this transaction?
Dr I/S 390,000 Cr Deferred Tax A/c 50,000 Cr Current Tax A/c 340,000
That deals with the tax charge to the Income Statement, the increase in the deferred tax provision and the credit to the current tax account which, when balanced off, will have increased the current tax liability
What I don’t understand is why the company has paid 400,000 tax liability based on the current year’s estimated profits when the estimated tax charge for this year’s profits was only 340,000
Is this an actual question from a real life situation, a question from a revision kit or even a question from the course notes?
it was a question from my textbook, question about redraft the financial statements.
The unadjusted statement of comprehensive income showed the tax paid was 400,000 and deferred tax liability was 150,000 (credit side) in Statement of financial position.thanks for the answer =)
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