HI,
Could somebody please help me to understand how to post and adjustment to corporation tax provision which should have been posted for previous year but never has been posted.
correct journal entry will be D 3100 Reserves
C 2320 Ctax Creditor
But I don't understand where to post it after the year end has been processed.
If I process it the same way I think it will change the reserves figure comparing to previous year broad forward.
Any suggestion how to fix it will be much appreciated.
Best regards,
Mag
Replies (14)
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No idea I'm afraid. Like I
No idea I'm afraid. Like I said it's the CT charge, which I would not have thought would be too difficult to find on your chart of accounts. It's where it would have been posted to last year if it had not been overlooked.
If this was included in the annual stat accounts for the previous year and you have now processed the year end on the accounting package and cleared out the profit and loss codes then it is appropriate to debit to the profit and loss account reserve to correct reserves brought forward. You should process it with the last year end date
If it was not include in the stat accounts last year then debit the corporation tax code in the P&L range and date it in the current year.
Tax reduces P&L b/f
This is a problem with Sage. Once the year is closed down you can't go back and amend the ledger for previous year entries. You can only do the Balance Sheet entries to bring the Sage balances into line with what was submitted to Companies House.
So the correct journal entry is Dr 3100 Reserves
C 2320 Corp tax Creditor
Then debit 2320 when the tax is paid.
Accounts filed with Companies House
Was the Corporation Tax payable included in the accounts filed with Companies House?
Previous Year Adjustment
The previous year's tax could go to a Previous Year Adjustment account.
9001 seems to be the Sage code for Corporation Tax. My thought would be to use 9002 for the previous year adjustment account so you don't change the balance sheet figures.