In accounting, the accrual of additional tax is an important financial treatment. The following details how to make accounting entries to calculate and record the accrued additional tax.
First, we need to determine when and how much additional tax will be accrued. Normally, enterprises are required to accrue additional tax at the end of the year in accordance with the regulations of the State Tax Bureau. Specifically, before preparing the financial statements at the end of the year, the company needs to calculate the additional tax payable for the current year in accordance with the relevant regulations and record it as a liability in the balance sheet. At the same time, the additional tax amount is also deducted from the profit before tax in the income statement, resulting in a net profit after tax. Therefore, the accounting entries for the provision of additional tax are as follows:
1.Determine the time and amount of accrual:
According to the relevant regulations of the State Administration of Taxation, enterprises should accrue additional tax before the end of each year. Therefore, before preparing financial statements, businesses need to carry out the following steps:
a.Determine the total profit for the year.
b.Calculate the income tax rate for the current year.
c.Multiply the total profit by the applicable income tax rate to get the taxable income.
d.The tax payable is obtained by adding additional tax (if applicable) to the taxable income.
e.Comparing the above results with the previous year, if the tax payable in the current year is higher than in the previous year, an additional tax amount is required;Otherwise, there is no need to increase the additional tax.
2.Preparation of accounting entries:
Based on the above information, we can prepare the following accounting entries to record the accrual of additional tax:
Debit: Tax Payable – Additional Tax Credit: Bank Deposit or Cash.
Among them, the "Tax Payable - Additional Tax" account is used to calculate the amount of additional tax payable by the enterprise, while the "Bank Deposit or Cash" account is used to deposit the additional tax payment.
3.Adjusting the balance of the profit and loss account:
The accrual of additional tax will affect the total profit of the enterprise, so the balance of the profit and loss account needs to be adjusted after the accrual is completed. For example, in the income statement, the net amount of profit before tax minus additional tax is net profit after tax. Therefore, after the additional tax is accrued, the total profit before tax needs to be subtracted from the additional tax, and then the income tax expense is subtracted to obtain the final net profit after tax.
4.Carry-forward balance sheet items:
After the accrual of the additional tax is completed, it needs to be transferred from the liability part of the balance sheet to the equity part. Specifically, the debit amount of the "Tax Payable - Additional Tax" account is credited to the "Capital Reserve - Other Capital Reserve" account, and the credit amount is credited to the "Surplus Reserve - Statutory Surplus Reserve" account. The purpose of this is to reflect the additional tax burden borne by the company and the additional benefits enjoyed by shareholders.