Hi everyone, I work for a customs broker, and we make customs Duty payments on behalf of the customers. The customer later gets billed for the full service, plus the duty payment made. Currently the flow is as follow.
Duty in incurred
Dr. Duty Expense
Cr. Duty Payable
We pay Duties
Dr. Duty Payable
Cr. Cash
We bill Customer
Dr. Receivables
Cr. Duty Receivables (Income)
Customer Pays
Dr. Cash
Cr. Receivables
The thing is, this is not income, we are just paying the duties on behalf of the customers. Can someone tell me if I correct when I think the entries to Duty expense and Duty receivables should be done. Should I make an entry between Duty expense and Duty receivables (income) to cancel them out?
