How to treat sales tax on an expense journal entry
I booked prepaid insurance to a pre-paid account and included the sales tax we paid on that. How do I treat the sales tax on the recurring journal entries to the insurance account every month? Do I include the sales tax or not? Is the monthly sales tax portion booked on a separate line to the GST/HST account?
How to treat sales tax on an expense journal entry
Hi Anna - in answer to your query concerning HST and prepaids. If you do have a prepaid entry that has HST, you book the HST as normal when recording the prepaid expense. This way only the "net" of HST will be in your prepaid account, and then HST will not influence your monthly JE entry when you credit prepaid expense and debit corresponding expense account.
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