What is a sales tax reserve?

What is a sales tax reserve?

Sales Tax Reserve means a reserve against the Borrowing Base, to be reflected on each Borrowing Base Certificate submitted by Borrower, equal to the amount, if any, by which Borrower’s obligations for the remittance of sales and use taxes payable to Governmental Authorities exceed $5,500,000.

How do you record sales tax in accounting?

To record received sales tax from customers, debit your Cash account, and credit your Sales Revenue and Sales Tax Payable accounts. When you remit the sales tax to the government, you can reverse your initial journal entry. To do this, debit your Sales Tax Payable account and credit your Cash account.

What is the journal entry for sales tax?

What Is the Journal Entry for Sales Tax? The journal entry for sales tax is a debit to the accounts receivable or cash account for the entire amount of the invoice or cash received, a credit to the sales account and a credit to the sales tax payable account for the amount of sales taxes billed.

Is sales tax a loss contingency?

Uncertainty regarding tax positions not within the scope of ASC 740, Income Taxes, such as sales and use tax should be assessed as a loss contingency pursuant to ASC 450, Contingencies.

How do you record SST in accounting?

Link the tax code to the account payable that you have created in your COA. After that, when you record your supplier invoice that have SST, you can easily add the tax code to your purchased items and they will be recorded to the account. In such way, you can record charges for your cost of goods and tax paid.

Where do Reserves go on the balance sheet?

Understanding Balance Sheet Reserves Balance sheet reserves are entered as liabilities on the balance sheet and represent funds that are set aside to pay future obligations.

Does sales tax go on balance sheet?

Sales tax and use tax are usually listed on the balance sheet as current liabilities. They are both paid directly to the government and depend on the amount of product or services sold because the tax is a percentage of total sales. The sales tax and use tax depend on the jurisdiction and the type of product sold.

Is sales tax an accrued expense?

Two common types of accrued liabilities concern sales taxes and payroll taxes. These costs accrue—meaning the amounts accumulate over time—and then they are paid.

How do you reconcile sales tax?

Add the sales tax bills for the period to your sales tax payable balance; then subtract your sales tax checks. In the example, $5,000 plus $6,000 minus $8,000 equals an account balance of $3,000.

How do I report a section 453A C?

453A(c)(1) provides that the taxpayer’s income tax is increased by the interest charge. The interest charge is reported on the taxpayer’s 2013 Form 1040, U.S. Individual Income Tax Return , line 60. The taxpayer should check box c on line 60 and enter “453A(c)” in the space provided. Sec.

When should a loss contingency be accrued?

Accrual of a loss contingency is required when (1) it is probable that a loss has been incurred and (2) the amount can be reasonably estimated. An entity must determine the probability of the uncertain event and demonstrate its ability to reasonably estimate the loss from it to accrue a loss contingency.

Does sales tax count as revenue?

No. The sales taxes collected in retail aren’t included in earnings figures. Hence, sales tax isn’t displayed in an income report. The collected sales tax is listed as a current liability until it is remitted to the government.

When should I charge my SST?

The taxable period of SST is a period of 2 calendar months. Hence, SST returns must be filed every 2 months even if there is no tax to be paid. The SST payment should be done within 30 days from the end of the taxable period.

How do you treat reserves in accounting?

In accounting, the reserves are recorded by debiting the retained earnings account and then crediting the same amount to the reserve account. After the activity which caused the reserve to be created has been completed, the entry is to be reversed by shifting the balance back to the retained earnings account.

What is the journal entry for reserves?

In accounting, reserves are recorded by debiting the retained earnings account then crediting the same amounting to the reserve account. When the activity which caused the reserve to be created has been completed, the entry should be reversed, shifting the balance back to the retained earnings account.

Where does sales tax go on financial statements?

Sales tax and use tax are usually listed on the balance sheet as current liabilities. They are both paid directly to the government and depend on the amount of product or services sold because the tax is a percentage of total sales.

Where does sales tax go on P&L?

Sales tax is a liability and as such transactions using that liability account don’t appear on your P&L because it is neither income or an expense.

Should sales tax be paid on accrual or cash basis?

accrual basis
495.0000 SALE 495.0672 Time of Sales Tax Liability. Payment of sales tax is on an accrual basis and not on a cash basis. Sales tax must be reported and paid with the return for the period in which the sale occurs.

How do I reconcile sales tax liabilities in QuickBooks?

Reconciling Sales Tax Payable

1. Go to QuickBooks Reports menu >
2. Select Vendors & Payables then Sales Tax Liability.
3. Delete the From date.
4. Ensure the To date on the report matches the date in the Show sales tax due through the box on the Pay Sales Tax window.

How do I clean up sales tax payable in QuickBooks?

Double-click select Sales Tax Payable account to open its register. Find the sales tax payment that was just entered, select the payment. From the Edit menu, select Delete Sales Tax Payment, then choose OK.