Dear Sir,
Kindly advise which entry is suitable for provision for income tax.
(1). Proprietor Capital account. Dr.
Provision for income tax Cr.
(2) profit & Loss account. Dr.
Provision for income tax Cr
I have passes second entry in tally Net profit. 521000/-
Profit and loss account Dr. 11000/-
Provision for income tax Cr 11000/-
Rest balance profit 510000/- Transfer to Capital account. but now the problem is that I am preparing profit and loss and balance sheet in excel format here how can I adjust Rs.11000/-
1) 2nd entry is correct for provision of income tax.
2) Show provision for tax in the P&L account (after Net profit). This will in effect reduce net profit by tax component.
3) Balance (Profit After Tax) will get carried forward to the capital account in the balance sheet.
CAclubindia
