11 July 2011
please suggest me how to pass entries in 2010-2011 books in following situation. BALANCE SHEET SHOWS THE FOLLOWING BALANCES..NOW THERE IS NO NEED TO PAY THE TAX IN EARLIER YEARS..SO i want to close the provision for tax a/c.(NOT CARRYING FORWARD TO NEXT YEAR)
PROVISION FOR TAX 2007-2008 A/C 7000 CR PROVISION FOR TAX 2008-2009 A/C 15000 CR PROVISION FOR TAX 2009-20010 A/C 5000 CR GENERAL RESERVE A/C 45000 CR PROFIT AND LOSS A/C 67500 CR BANK 55000 DR TAX FOR THE YEAR(2010-2011) IS 32000.
12 July 2011
Assuming there is no balance under the head Advance Tax paid, entry may be passed:
PROVISION FOR TAX 2007-2008 A/C Dr. 7000 PROVISION FOR TAX 2008-2009 A/C Dr. 15000 PROVISION FOR TAX 2009-20010 A/C Dr. 5000 To Profit & Loss A/C 27000 For presenting the same in P& L Account, Rs.27000 may be shown as Taxes for earlier years (in negative) and below the line.