Sales Tax Credit

USA Discussion in 'General Accountancy Discussion' started by ADDISION, Oct 10, 2018.

  1. ADDISION

    ADDISION

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    I have the following situation for a return that was filed 09/15/18

    Sales tax Liability for August 2018 $2478.00 G/L account 2220
    Early filing discount $6.20
    Remaining Liability $2471.80


    Now, I was issued a credit on Sep. 10th for $6000 for an over-payment that was made in January 2018.

    The State automatically applied part of the credit to the return filed 09/15. So the remaining credit is $3528.20.

    How do i record this as a journal entry to my books so that I show the credit posted against the return, and so I show the remaining credit?
     
    ADDISION, Oct 10, 2018
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  2. ADDISION

    bklynboy VIP Member

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    Record as follows:

    Debit: Sales Tax Expense 2,471.80
    Credit: Liability 2,471.80

    Record Credit:
    Debit Liability 2,471.80 (you no longer owe this)
    Debit Receivable 3,528.20 (You are owed this or can apply against future sales tax)
    Credit Sales Tax Expense 6,000 (Adjust prior amount expensed which was overstated)
     
    bklynboy, Oct 10, 2018
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