Do you want to stop doing this? Generally, these IOUs will be transferred when they are settled. You don't need to make your own book adjustments, just do the accounting treatment of income tax. If so, that's the wrong question. This really happened. How can you not do it?

If you have to adjust, will you pay the 25,000 pounds in cash or in the bank? Suppose cash.

Borrow: cash

Credit: adjustment of profit and loss in previous years

Debit: previous year's profit and loss adjustment

Loan: profit distribution