If the 1099 is showing the full Gross Sales, then it looks like you're going to have to show that full Gross Income and then show the reduction of the Sales Tax. There are a couple of ways to do it and your Accountant may have a preference, but with a couple of restaurants I've worked with before the used a a couple of Sub Accounts. It looked something like this:
Sales (parent Acct)
- Credit Card Sales (Sub Acct: your $5,500 Gross sales goes here)
- Sales Tax Owed (Sub Acct: this was a negative entry that reduced Gross Sales)
Sales Tax Liability (this is where the above "Sales Tax Owed" went to show what was owed in taxes)
In the above scenario when they wrote a check to the City/State for the Sales Taxes owed it would reduce the Liability Acct. But you're not writing the check. So I'd strongly suggest you make a quick call to your Accountant for how they want the payment shown. I'm guessing a General Ledger entry, but I've seen a lot of Accountants say the last thing they use is a GL entry. And you don't want them trying to figure out what the huge balance is in the Sales Tax Liability Acct during tax season
Also... This time you mentioned Merchant Fees (or I missed it before). So obviously that gets broken out into an Expense Acct and the full $600 does not go into the ST Liability Acct. Probably a Sub Acct under Fees, but you might ask your Accountant when you speak to them. (Anything you can do to get the accounts the way THEY want to see them will just speed up the process at tax time.)
