Adding Sales Tax Lines to Journal Entries and IR/Bills
For situations where you need to book a Sales Tax amount to the Sales Tax Payable Account on a Journal Entry or an IR/Bill, we have added a feature to simplify the process.
This feature is most commonly used in Canada to post the Sales Tax Receivable amounts on IR/Bills. It can also be used to post credits or adjustments to Sales Tax Amounts due for various reasons. Please note that this process does NOT adjust Taxable or NonTaxable Sales in the Sales Tax Detail Report.
To use this feature, you will input the Taxable Amount and choose the correct Sales Tax Group to prompt the system to add referenced line items for each jurisdiction, calculate the tax amount for each line item, and populate the amount on each line item created. This greatly simplifies the process of adding these amounts to the document. You will have full edit capability on the line items after they have been added.
You can access this feature directly on the Journal Entry or IR/Bill document.
Company > New > Journal Entry
Suppliers > New > IR/Bill
On the Journal Entry, you will find the option to Add Sales Tax Group Items in the menu at the top of the document.
On the IR/Bill, click on the menu for Options and you will find the feature for Add Sales Tax Group Items.
After selecting Add Sales Tax Group Items from either document, you will get a pop-up to add the Total Taxable Amount. This allows you to add the Taxable Amount that you wish to calculate and post tax amounts on the document. For example, in a situation where you pay a 10% sales tax and you have a bill for $1,000.00 for which you need to post the tax to the Sales Tax Payable account, you will enter $1,0000.00 into this pop-up and click OK.
You will see a second pop-up listing all active Sales Tax Groups set up in the company. Choose the applicable group for the system to use in calculating the tax amount for the line items. Double-click on the Sales Tax Group to populate the line items on the document.
A Journal Entry will populate the line items with a memo as shown below. You can edit any of the fields or delete any of the line items once added to the document.
An IR/Bill will populate the line items with a memo as shown below. You can edit any of the fields or delete any of the line items once added to the document.
The documents will now populate in Sales Tax Detail as shown.
Note that entering the data on the documents creates the Debit and Credit entries differently:
Journal Entry - Positive Taxable Amount = Credit Entry to Sales Tax Payable (Tax Liability)
IR/Bill - Positive Taxable Amount = Debit Entry to Sales Tax Payable (Tax Receivable)
You can enter a Negative Taxable Amount on either document to create the debit or credit entry as needed.
Alternately, you can edit the amounts in the Journal Entry and move them to the correct column.
On the IR/Bill, edit the Qty Received to be negative to change from a Debit Entry to a Credit Entry in the Sales Tax Payable account.
There are no restrictions to editing or deleting these line items once populated on the documents other than the standard RIMSS editing restrictions. The line items will be locked for editing upon entry of a downstream transaction, reconciliation of a g/l account on the document, payment of the Sales Tax, or the institution of an Accounting Close that includes the date of the document.