bookkeeping question

[Liz]

On Mon, 23 Jan 2012 00:42:20 -0500
Wiliam Colls <william.colls at rogers.com> wrote:

> On 01/22/2012 10:10 PM, Liz wrote:
> >
> > I have solar panels and am selling electricity to the same people
> > who sell me electricity.
> >
> > I get an account with a lot of lines, but it could be summarised as
> >
> > Money I owe them for electricity (with tax)
> > Money they owe me for electricity (without tax)
> > Money they owe me for electricity (tax position uncertain)
> >
> > The account just runs into credit until I apply for payment from
> > them, which does complicate my account keeping.
> >
> >
> > I'd like the income kept in a separate place so I can compare
> > against the capital expenditure on the solar installation.
> >
> > I also need to keep the small amount with uncertain tax status
> > separate until I find out if I pay tax on that income or not.
> >
> > I've tried twice to work out how to record all this lot, and now I
> > have the cheque for my income I need to be able to sort this out.
> > I'm sure that a couple of regular writers to this list will assist
> > me, and thank them in advance.
> >
> > Liz
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> 
> The absolutely correct answer to this one will depend on where you
> are, and exactly what type of taxes are charged by the electric
> company, and what taxes you may be liable for on the power you sell
> back. I am in Ontario Canada I think this is how I would handle it.
> 
> When the bill is received:
> 
>                                 Debit       Credit
> Expense: Electricity           25.00
> Expense: PST                    2.00
> Expense: GST                    1.25
> Income: Power no tax                       30.00
> Income: Power maybe Tax                    30.00
> Asset: Acc Rec                 31.75
> 
> Then when you get the cheque From the power company
> 
> Asset: Bank                    31.75
> Asset: Acc Rec                          31.75
> 
> 
> Couple of Comments: In Ontario PST is straight sales tax at 8%. The
> GST is a value added tax at 5%. If your revenue is below a certain
> level, you don't have to register with Revenue Canada. If it is over
> a certain level you must register, and collect the GST on the power
> you sell back. On the other hand, you then deduct the GST you paid on
> the power you bought, and remit the difference. The cut off is
> somewhere around $32,000.00, so probably not an issue here.
> 
> HTH.
> 
> William.
> 
> 

For readers following, as I use the Accounts Receivable through the
business features, I chose to make the suggested Asset: Acc Rec into
Asset: Solar FiT

FiT = feed in tariff 

thanks for the help