Sales tax collections and dispersal

[Fast Radio]

This seems wrong to me.

I used the method similar to the out outlined in the book




      On Sunday, November 2, 2014 8:02 PM, John Ralls <jralls at ceridwen.us> wrote:
   

 
> On Nov 2, 2014, at 7:04 PM, Allen Cogbill <acogbill at geopotential.com> wrote:
> 
> I have what should be a simple problem, but I don't quite understand how to set up the transfer accounts properly. When I make a sale and collect sales tax, the funds are credited as follows:
> 
> 1. Sale Amount credited to Checking (asset)
> 2. Sales tax collected credited to Checking (asset)
> 3. Sale Amount credited to "Sales" (an income account)
> 4. Sales tax amount credited to "Sales tax" (liability)
> 
> Later, when I actually pay the sales tax, I want to
> 
> 1. Debit Sales tax amount from checking account, because the tax is paid from the checking acct
> 2. Debit "Sales Tax" liability Account
> 3. Credit "Sales Tax" expense account
> 
> The problem is that the second operation does not balance. I don't want to expense the sales tax when it is collected, for it is actually paid at a later date.

Sales tax that you collect on behalf of the State isn't an expense to you. It's the State's money, paid by the buyer, which you're holding onto for a little while.

Regards,
John Ralls
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