Wednesday, July 4, 2012

Tax Earned Journal Entry

What is the correct journal entry for tax on interest earned into the general ledger?

If the tax is $20 then the correct journal entries for entering the tax are:

DEBIT: Interest Payable Account $10
CREDIT: Cash $10.

If there is interest in the bank statement not yet recorded in the cash accounting ledger and for example it is $50, use the following journal entries to make the correction:

DEBIT: Cash (Cash-book) $50
CREDIT: Interest Received Account $50.

No comments:

Popular Accounting Problems

The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.