How to enter an expense associated with a liability
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Ilona Kovacs
Member Posts: 9 ✭
Hi - I enter a liability into the account Tax Payable and then when I pay the bill I transfer the Tax Payable amount into my bank account. However, I need to also raise an expense so that I can see Tax Paid in the Profit and Loss.
Any ideas how to achieve this?
I am using Reckon Accounts Personal 2016
Any ideas how to achieve this?
I am using Reckon Accounts Personal 2016
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Comments
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I assume you are talking about Income tax not GST. When you make a profit you will debit income tax expense, hitting the Profit & Loss, and credit income tax payable thus moving the amount of tax to be paid to the balance sheet.
When you make the payment you will debit income tax payable and credit bank. The tax paid will not hit your Profit & Loss a second time, but will appear in your statement of cashflows.
Best to speak to your accountant.
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Thanks - I agree with your explanation. My question is how do I do that in Reckon? I have created an Account called Tax Payable - I credit that - how do I debit the expense? If I do it from the Tax Payable account then I am unable to make the payment. I can’t work out where I debit Tax Expense - from which account do I do that from? Sorry - I hope I am getting my point across?? Unfortunately my accountant doesn’t do Reckon. I appreciate your help Ilona0
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Sorry - not talking about GST - talking about Income Tax0
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Its not the fundamentals I am struggling with - its how to enter it into the software ??0
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When you put the entry in the Tax payable account, the category you charge it to is Income tax expense.
When you pay the tax from the bank account, the transfer account will be Income Tax payable.
Unless your accountant has and is being very valuable to you, I would find a new one, who understands Quicken. You clearly need help with both accounting concepts and practical use of the software.1
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