diff --git a/addons/hr_expense/hr_expense.py b/addons/hr_expense/hr_expense.py
index e14e79aaa32..e744ead5544 100644
--- a/addons/hr_expense/hr_expense.py
+++ b/addons/hr_expense/hr_expense.py
@@ -317,7 +317,7 @@ class hr_expense_expense(osv.osv):
                 is_price_include = tax_obj.read(cr,uid,tax['id'],['price_include'],context)['price_include']
                 if is_price_include:
                     ## We need to deduce the price for the tax
-                    res[-1]['price'] = res[-1]['price']  - (tax['amount'] * tax['base_sign'] or 0.0)
+                    res[-1]['price'] = res[-1]['price'] - tax['amount']
                     # tax amount countains base amount without the tax
                     base_tax_amount = (base_tax_amount - tax['amount']) * tax['base_sign']
                 else:
@@ -328,7 +328,7 @@ class hr_expense_expense(osv.osv):
                              'name':tax['name'],
                              'price_unit': tax['price_unit'],
                              'quantity': 1,
-                             'price':  tax['amount'] * tax['base_sign'] or 0.0,
+                             'price': tax['amount'] or 0.0,
                              'account_id': tax['account_collected_id'] or mres['account_id'],
                              'tax_code_id': tax['tax_code_id'],
                              'tax_amount': tax['amount'] * tax['base_sign'],
diff --git a/addons/hr_expense/tests/__init__.py b/addons/hr_expense/tests/__init__.py
new file mode 100644
index 00000000000..8c94d56e555
--- /dev/null
+++ b/addons/hr_expense/tests/__init__.py
@@ -0,0 +1,5 @@
+from . import test_journal_entries
+
+fast_suite = [
+    test_journal_entries
+]
\ No newline at end of file
diff --git a/addons/hr_expense/tests/test_journal_entries.py b/addons/hr_expense/tests/test_journal_entries.py
new file mode 100644
index 00000000000..55251486607
--- /dev/null
+++ b/addons/hr_expense/tests/test_journal_entries.py
@@ -0,0 +1,61 @@
+from openerp.tests.common import TransactionCase
+from openerp import netsvc
+
+
+class TestCheckJournalEntry(TransactionCase):
+    """
+    Check journal entries when the expense product is having tax which is tax included. 
+    """
+
+    def setUp(self):
+        super(TestCheckJournalEntry, self).setUp()
+        cr, uid = self.cr, self.uid
+        self.expense_obj = self.registry('hr.expense.expense')
+        self.exp_line_obj = self.registry('hr.expense.line')
+        self.product_obj = self.registry('product.product')
+        self.wf_service = netsvc.LocalService('workflow')
+        self.tax_obj = self.registry('account.tax')
+        self.code_obj = self.registry('account.tax.code')
+        _, self.product_id = self.registry("ir.model.data").get_object_reference(cr, uid, "hr_expense", "air_ticket")
+        _, self.employee_id = self.registry("ir.model.data").get_object_reference(cr, uid, "hr", "employee_mit")
+        self.base_code_id = self.code_obj.create(cr, uid, {'name': 'Expense Base Code'})
+        self.tax_id = self.tax_obj.create(cr, uid, {
+            'name': 'Expense 10%',
+            'amount': 0.10,
+            'type': 'percent',
+            'type_tax_use': 'purchase',
+            'price_include': True,
+            'base_code_id': self.base_code_id,
+            'base_sign': -1,
+        })
+        self.product_obj.write(cr, uid, self.product_id, {'supplier_taxes_id': [(6, 0, [self.tax_id])]})
+        self.expense_id = self.expense_obj.create(cr, uid, {
+            'name': 'Expense for Minh Tran',
+            'employee_id': self.employee_id,
+        })
+        self.exp_line_obj.create(cr, uid, {
+            'name': 'Car Travel Expenses',
+            'product_id': self.product_id,
+            'unit_amount': 700.00,
+            'expense_id': self.expense_id
+        })
+
+    def test_journal_entry(self):
+        cr, uid = self.cr, self.uid
+        #Submit to Manager
+        self.wf_service.trg_validate(uid, 'hr.expense.expense', self.expense_id, 'confirm', cr)
+        #Approve
+        self.wf_service.trg_validate(uid, 'hr.expense.expense', self.expense_id, 'validate', cr)
+        #Create Expense Entries
+        self.wf_service.trg_validate(uid, 'hr.expense.expense', self.expense_id, 'done', cr)
+        self.expense = self.expense_obj.browse(cr, uid, self.expense_id)
+        self.assertEquals(self.expense.state, 'done', 'Expense is not in Waiting Payment state')
+        self.assertTrue(self.expense.account_move_id.id, 'Expense Journal Entry is not created')
+        for line in self.expense.account_move_id.line_id:
+            if line.credit:
+                self.assertEquals(line.credit, 700.00, 'Expense Payable Amount is not matched for journal item')
+            else:
+                if line.tax_code_id:
+                    self.assertEquals(line.debit, 636.36, 'Tax Amount is not matched for journal item')
+                else:
+                    self.assertEquals(line.debit, 63.64, 'Tax Base Amount is not matched for journal item')