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journal entry to record vehicle expense using standard mileage?

Asked by: livingeditor 1052 views YA Discussion

Ok, I have journalized the disbursements off the bank statements and have a dollar amount for vehcile expenses. However, I will be using the standard mileage rate, which will be a higher deduction. What would the journal entry be to record this difference between actual and standard? If I debit vehicle expense for this difference, what do i credit???? This is for a sole proprietorship.

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2 Answers

  1. Bash Limpbutt's Oozing Cyst© on Jul 19, 2012 Reply

    You don’t do anything. Your books will always reflect the actual costs. You have a choice of using either actual costs or the standard mileage rate for tax purposes. If you use the mileage rate, your net profit per your books will be different (higher in your case) than the net profit for tax purposes.

    This is pretty common. It’s not unusual to have several sets of books when accounting standards clash with the tax code. This is very common with depreciation in particular.

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