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    Lisa2540's Avatar
    Lisa2540 Posts: 3, Reputation: 1
    New Member
     
    #1

    Mar 20, 2012, 09:55 PM
    Accounting
    In a company account worksheet, I have income tax expense which I have to raise a liability for in the balance sheet, so I have to transfer loss including income tax expense to retained earnings, I then have to credit retained earnings with the amount of income tax expense (as it is undeductible). I have to also credit Sundry Creditors or Income Tax Payable with the tax expense but don't know what to debit to balance this entry. Please help.
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    Mar 21, 2012, 11:16 PM
    There is usually a provision for income tax liability and an expense account called income tax.
    The net income/loss acccount to cleared out to retained earnings

    I don't understand the loss you are speaking about, if there is a loss then there is usually no income tax liability. A loss is when expenses exceed income whereas income tax is levied on a profit

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