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    3 Replies Latest reply on May 17, 2008 4:07 PM by Santa Fe CPA

    accounting entry question

    t1luke Newbie
      I would like to know the correct way to set up or how I would track the use tax - I have it like this now - I make an entry into AR and to expense, then when I pay it at end of quarter my entry is Checking acct and AR. is this correct ?

        • Re: accounting entry question
          LUCKIEST Guide
          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.

          • Re: accounting entry question
            Santa Fe CPA Adventurer
            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.