Proper Way to Enter Taxable Purchases

[Maf. King]

On Wed 2 April 14 14:07:52 Donna Pfeifer wrote:
> I have been looking for information for recording taxable purchases from a
> vendor for in-house use.
> 
> I have a liability account for Sales Tax Collected for sales.
> 
> Do I create another one for Sales Tax Owed?
> 
> Is it some sort of split transaction? If so, how do you reconcile at the end
> of the month as the amount paid (say $29.00) will come out of checking
> right away but the sales tax won’t be paid until after the end of the
> month.
> 
> Please keep replies on the basic level as I am new at this.
> 
> Thanks,
> Donna

Hi Donna,

I don't know what the rules are for your country.  In the UK, I handle VAT 
within gnucash.  With your sales tax, can you reclaim what you have paid on 
purchases when you send in the tax you've collected on your sales?

I don't understand about your reference to reconciling - when you buy 
something, don't you hand over the total to the vendor? - so the $29 you 
mention, is actually $25 for the goods and $4 in sales tax. (made up figures!) 
When you reconcile against a bank statement, you'll see $29 leaving the bank 
in both GC and on the statement.

If your sales tax works the same way as our VAT, then you would need an asset 
account called something like "Sales Tax Paid on Purchases" and split the 
purchase transaction between Expenses:Widgets and SalesTaxPaid.

HTH,
Maf.