Question about Income Tax allocations

[Grace1982]

Good Day
I would like to know about the journal entry when processing the tax for my company. I understand that I need to DR Tax in the IS and CR the Tax control account - and then when making payment I DR the tax account and CR bank. But when doing this entry, it reduces my net profit in my income statement - I am processing this on Pastel, and created the tax account in the income statement using the 130 - Tax Financial Category in the options. But surely my tax owing is not supposed to reduce my net profit / loss? Or am I being confused. Many thanks, Grace

[Dave A]

I am not sure which entry has you confused, so I'll try to cover both -

I understand that I need to DR Tax in the IS and CR the Tax control account

This is correct, and yes, Taxes do reduce your profit.

and then when making payment I DR the tax account and CR bank. But when doing this entry, it reduces my net profit in my income statement

In this entry, make sure you debit the Tax Control Account (the balance sheet account).