333 Deferred Taxes

Liabilities

Long Term

Synopsis

Account 333 is established to record reserves for taxes, which are due beyond the next 12 month period.

Debits

Credits

 

  1. The amount of taxes that have been deferred for payment beyond the next 12 months

 

Example 1

Record the year-end audit adjustment for the deferred taxes due of $5,500 to the difference in book and tax depreciation methods.  (Note – the books had already been closed for the year)

Journal: General Journal

Entry:

 

Debit

Credit

Account 370

Retained Earnings

$5,500

 

Account 333

Deferred Taxes

 

$5,500

Comments

Deferred Taxes is established to present the estimated actual taxes to be paid in future years.

Note:

Professional tax and accounting advice should be obtained regarding Differed Taxes.