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accounting entry question, Welcome, Do you have an Accountant??
When you sell an item it is a Debit to Cash or A R,
A Credit to Sales and another credit to Sales or Use Tax Payable.
At the end of the quarter, you pay the tax, A Debit to the Payable and a Credit to Cash.
Sales or Use Tax is NOT an expense.
No Accountant yet - very small and new custom woodworking business. I have bought some supplys "wood screws and such" over the internet and did not pay sales tax on them that is why I think it is an expense.
Thanks again :-)
Use tax applied to a purchase of a tangible product that was not previuosly taxed is a tax expense item.
You should calculate the tax based upon your locality's tax rate and book the amoun as as expense offset by the tax payable account then pay from a cash disbursement offsetting the payable.