General Ledger : How to record prepaid income tax to IRS?

Question

I'm helping my uncle to record his transactions from bank statement to Easy ACCT program.
I should do journal entries for prepaid tax to IRS. One payment was $ 2,000, on Aug. and $ 3,000
to IRS on Sep.

Would you please help me what account I should go with?

Thank you!

Answer 1

Best Answer - Chosen by Voters

Dear Heather: Q&A's in the "Intuit Community" cover this and many other scenarios.

Estimated payments will work.

This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent

Answer 2

Assuming you are recording the tax liability...

The entry should be the following:
Debit - Accounts Payable - Taxes
Credit - Cash

Each month there should be an entry to the AP - Tax account and the Tax Expense account recording that month's liability. When you make payments to Uncle Sam, you are lowering what you owe.

Source(s):

Self- Accountant

Answer 3

debit: prepaid expenses
credit: cash in bank(ck #)
I am not familiar with that program but apply those two items to whatever system has set up