fixing a Sales tax discount balance in a liability account

compjones · ‎December 20, 2018

I am using Quickbooks Pro Desktop - for some reason I had my sales tax discount tied to a "other current liability". The first transaction occurred in 2011 and has since this time been growing in a balance. I understand that I need to set up a "other income and other expense" respectively to post in my ledgers.

How can I close out the liability account for 2011-2018 and then move all the monies from 2018 to the proper accounts for the future? My balance as of Dec 2017 is $391.43, can I write this to a misc. account - income/expense to close out and bring my books back into proper transactions?

Thank you,

Rustler · ‎December 20, 2018

I understand that I need to set up a "other income and other expense" respectively to post in my ledgers.

Well, a sales tax discount is income to the company, there is no expense associated with it.

Typically you use sales tax adjust, set the adjustment to decrease, select the other income account, select the vendor and enter the amount.

so the options are

1. go back in time and edit each and every sales tax transaction adjustment, changing the adjustment account to income - NOTE that if you do that, you will be changing the financial history of the file and it will no longer match up with income tax filings. How significant that mismatch will be only you can know

(not the way I would do it, but offered as an option)

or

2. Do a journal entry for the past years discounts that are sitting in the liability account
debit liability and credit other income for the total amount 2011-2017
then edit this years sales tax adjustments to use the correct income account as the adjusting account

View solution in original post

Rustler · ‎December 20, 2018

I understand that I need to set up a "other income and other expense" respectively to post in my ledgers.

Well, a sales tax discount is income to the company, there is no expense associated with it.

Typically you use sales tax adjust, set the adjustment to decrease, select the other income account, select the vendor and enter the amount.

so the options are

1. go back in time and edit each and every sales tax transaction adjustment, changing the adjustment account to income - NOTE that if you do that, you will be changing the financial history of the file and it will no longer match up with income tax filings. How significant that mismatch will be only you can know

(not the way I would do it, but offered as an option)

or

2. Do a journal entry for the past years discounts that are sitting in the liability account
debit liability and credit other income for the total amount 2011-2017
then edit this years sales tax adjustments to use the correct income account as the adjusting account

compjones · ‎December 22, 2018

Thank you that helped fix the issue

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fixing a Sales tax discount balance in a liability account