324 Sales Tax Payable
Liabilities
Accrued
Synopsis
Account 324 is established to record the amount of Sales Tax payable or accrued.
Debits |
Credits |
|
|
Example 1
Record the use tax of $375 on the purchase of furniture from out of state in the amount of $7,875.
Journal: Cash Disbursements and Purchase
Entry: |
|
Debit |
Credit |
Account 284 |
Furniture & Fixtures |
$7,875 |
|
Account 202 |
Cash in Bank |
|
$7,500 |
Account 324 |
Sales Taxes Payable |
|
$375 |
Example 2
Record a customer cash sale of $618 on a repair order for mechanical labor and parts. The customer labor sale is $340 and the parts sale is $250. The sales tax is $13 and the shop supplies are $15. The cost of labor is $100 and cost of the parts is $80.
Journal: Service Sales - Cash
Entry: |
|
Debit |
Credit |
Account 225 |
Cash Sales |
$618 |
|
Account 660A |
Cost of Sales – Customer Labor – Cars & Light Duty Trucks |
$100 |
|
Account 667 |
Cost of Sales – Parts Mechanical Repair Orders & Light Duty Trucks |
$80 |
|
Account 242 |
Inventory – Parts & Accessories |
|
$80 |
Account 247A |
Inventory – Work in Process – Mechanical |
|
$100 |
Account 324 |
Sales Taxes Payable |
|
$13 |
Account 460A |
Sales – Customer Labor – Cars & Light Duty Trucks |
|
$340 |
Account 467 |
Sales – Parts Mechanical Repair Orders & Light Duty Trucks |
|
$250 |
Account 61-05 |
Other Supplies |
|
$15 |
Example 3
Record the payment of $19,365 for sales taxes collected for the month.
Journal: Cash Disbursements
Entry: |
|
Debit |
Credit |
Account 324 |
Sales Taxes Payable |
$19,365 |
|
Account 202 |
Cash in Bank |
|
$19,171 |
Account 905 |
Other Income |
|
$194 |
Comments
A credit balance represents unpaid sales and use taxes.
Note:
If applicable, federal excise tax and luxury tax can be handled through separate general ledger sub-accounts, 324A Sales Tax Payable - Excise Taxes and 324B Sales Tax Payable - Luxury Taxes. At month-end, these sub-accounts should be combined and shown with Account 324, Sales Taxes payable on the trial balance and operating report.
Transactions, which are related, should be recorded in separate sub-accounts. Sub-accounts serve to keep records organized for future analysis and auditing. The sub-accounts in these examples are designated by a letter following the account number (suffix). Please refer to your DSP's instructions for establishing sub-accounts.