Income shifting

Abedayyash · ‎January 26, 2022

Hello,

My manager asked me to shift most of this year's income to the next year to reduce the income tax amount since we haven't received money yet.

The facts are:

1) We use accrual basis

2) Projects are long-term projects and could take more than one year to finish

3) Most of the project progress was billed in 2021 but not yet paid.

Is there anything I can do to reduce the income (billed income) shown in the income statement? I need to debit the income account somehow.

Rustler · ‎January 26, 2022

Not real kosher, but you could debit income and credit unearned revenue with a journal entry. Create the unearned revenue liability account first

Abedayyash · ‎January 26, 2022

That's for 31/12

What about the journal entry for 01/01 when we do receive the money?

Dr. Cash

Cr. Sales

what about unearned revenue balance?

or should it be

Dr. Cash

Cr. A/R

Dr. Unearned revenue

Cr. Sales

Rustler · ‎January 26, 2022

Cash does not come into it, since you said you had not been paid

debit unearned revenue and credit sales income

when you do get paid the invoice will still be open, receive against it

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