Taxable Purchases

Derek Atkins warlord at MIT.EDU
Mon Jul 7 08:06:56 EDT 2014


Hi Donna,

Sorry for the delayed response -- had a busy weekend.

Again, IANAA but yes, this looks like a good way to record it.

-derek

Donna Pfeifer <donna32132 at yahoo.com> writes:

> Hi Derek, thanks for your response.
>
> I haven't paid the sales tax on the purchase yet as it was from one my
> wholesale vendors for the use of my business rather than for resale as is the
> norm. I am required to pay it when I submit the sales tax I collected after
> the end of the month. The amount for 'taxable purchases' is listed separately
> from sales tax collected on the report form so I created a separate account
> for it.
>
> Would the attached image be a better way to record it? This gives me a
> positive balance in the Sales Tax Owed account.
>
> Thanks!
>
> On Thursday, July 3, 2014 2:52 PM, Derek Atkins <warlord at MIT.EDU> wrote:
>
> Donna Pfeifer <donna32132 at yahoo.com> writes:
>
>> Is this the proper way to enter a taxable purchase? It results in a
>> negative amount in the account "Sales Tax Owed" which doesn't seem
>> right.
>
> I believe that yes, it is the proper way to enter it, although I'm not
> sure that this is really Sales Tax that is "Owed" -- it's Sales Tax that
> you already paid out, so making the Liability negative makes sense.
> It's not "money you owe to somebody else" (which is generally how I like
> to think about liabilities).
>
> When you make sales and collect sales taxes and split that into this
> liability, that should increase the liability...  That is money you do
> owe (to the government).
>
>> Will it cause an issue with end of June reconciliation since I won't
>> pay the sales tax until July?
>
> It shouldn't -- just don't reconcile the transaction when you reconcile
>
> the account.
>
>> Thanks in advance.
>
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>
> -derek
>
> --
>       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
>       Member, MIT Student Information Processing Board  (SIPB)
>       URL: http://web.mit.edu/warlord/   PP-ASEL-IA    N1NWH
>       warlord at MIT.EDU                        PGP key available
>
>

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available


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