Withdrew from bank for paying Income tax - Is itthe amount withdrawn for paying compaany's Income tax or that of the properitor ?
Withdrew from bank for paying Income tax - Is itthe amount withdrawn for paying compaany's Income tax or that of the properitor ?
Thumbs-up to Ishank. The Journal entry provided by him is when income tax is paid on the income of the firm or the business. However, normally, in Class-XI, the basic focus is on the sole proprietor (i.e. a single person carrying-out the whole business on his own). In most of the cases, interest tax is paid on the income of the proprietor and not on the business's income. The Journal entry when income tax is paid on proprietor's income is:
Journal
Date
Particulars
L.F.
Debit
Amount
Credit
Amount
Drawings A/c Dr.
To Cash A/c or Bank A/c
(Income tax paid on proprietor's income)
Along with the above Journal entry, also mention the following note as footnote (at the end of the Journal).
Note:- It has been assumed that the income tax is paid on the proprietor's income and not on the firm's income.
Thumbs-up to Ishank. The Journal entry provided by him is when income tax is paid on the income of the firm or the business. However, normally, in Class-XI, the basic focus is on the sole proprietor (i.e. a single person carrying-out the whole business on his own). In most of the cases, interest tax is paid on the income of the proprietor and not on the business's income. The Journal entry when income tax is paid on proprietor's income is:
Journal |
| ||||
Date | Particulars | L.F. | Debit Amount | Credit Amount | |
|
|
|
|
| |
| Drawings A/c Dr. |
|
|
| |
| To Cash A/c or Bank A/c |
|
|
| |
| (Income tax paid on proprietor's income) |
|
|
| |
Along with the above Journal entry, also mention the following note as footnote (at the end of the Journal).
Note:- It has been assumed that the income tax is paid on the proprietor's income and not on the firm's income.
