Good day all. I'm really grateful to be able to ask questions to ease my mind a bit. I want to make sure that I do things the correct way.
The CC with one VAT and IT number has 3 sub-divisions, each created as a separate company on Pastel (each with its own separate bank account number). First provisional payment August 2016 was made from the one company and the February 2017 second provisional payment made from the other company. The third and last payment for 2016 was also paid from the 2nd company.
The previous provisional payments were debited to a VAT/Tax Provision Account in the balance sheet and the bank account credited. Is it acceptable to allocate it to a provision account? Then how do I 'get rid' of the entries as the 2016 financial year is now completed?
I was advised by the previous bookkeeper that I should use loan accounts to allocate all the provisional tax payments to the one company's VAT/Tax Provision so that the one company has the taxable total as a debit balance. Thereafter I should credit it with the total and debit retained earnings and use the date as 29 February 2016 for the journal entry. Is this the correct way of doing it?
Then for the 2017 1st provisional payments I should use the VAT/Tax Provision account again.