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    lizxue's Avatar
    lizxue Posts: 1, Reputation: 1
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    #1

    Oct 15, 2010, 06:57 AM
    Journal entry cash payout for sales tax
    I do restaurant book, previous people make monthly journal entery for cash payout like this

    Dr Sales 1922.73
    Cr sales tax payable 1922.73
    Is that right. Please explain. Thanks
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #2

    Oct 15, 2010, 07:49 AM

    The entry should be:
    Debit Sales Taxes Payable for the amount because you are paying what is owed
    Credit Cash for the amount because you are decreasing cash account

    Your journal entry looks like you are transferring a portion of sales (Decrease sales) to sales taxes payable (Increase Sales taxes payable).
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