Journal Entry to record overpayment

Discussion in 'General Tax Discussion' started by rfpro, Apr 18, 2017.

  1. rfpro


    Jan 27, 2017
    Likes Received:
    Hello Everyone,

    I am trying to figure out the correct journal entry for an overpayment -

    Not only an overpayment - but the refund is applied to next year corporate tax deposit -

    the entry that was made is this:

    Income Tax Payable : d. xxxx
    Corporate tax deposit cr. xxxx

    I think this was wrong, because it makes the amount we have deposited over the year lower than we did (because of the credit to corporate tax deposit , which is an asset account)

    The way I am thinking is more like this:

    Cash: d xxxx (refund)
    income tax expense: cr. XXX

    Corporate tax deposit: d. XXX
    Cash cr. XXX (apply the overpayment)

    the difference in these two entries is that in one case we debt corporate tax deposit, in the other we credit.

    Last edited: Apr 18, 2017
    rfpro, Apr 18, 2017
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