An employer (supplier) is retaining $1000 of money owed to me (including GST) for one year to cover
Zzz_7796888
Member Posts: 4 ✭
An ex-employer (supplier) is retaining $1000 of money owed to me (including GST) for one year to cover any expenses relating to my workmanship (repairs etc). How do I enter this? As a journal entry? Is accounts payable the applicable account?
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Comments
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Create an Invoice, that way the GST is accounted for, then pay the invoice off with the money received.
Cheers
Glynis
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This is a normal practice in the Building and Construction Industry and I have seen it handled in many different ways. You can leave the balance outstanding on the invoice to remind you that it is owed and to recover it on time. Write yourself a note against the customer regarding it so you can remember in a year why and what was agreed upon.
This is what most do that I have seen. You do not have to pay the GST on the income until it is actually paid. If he claims any money from the retention then you can (if you agree with the claim) adjust the invoice to take up the expenses and reduce the outstanding amount.
You can also pay the invoice from a Retentions account but not sure if this is a one off or if your business does the retention as a matter of course.
You do not Journal to the Accounts Payable account. It is a master account. All adjustments need to be done via the actual invoice/customer account.
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Thanks for the extremely fast response!!! I have only recently set up my business in Reckon One, so I am still using my old invoicing system. I have subscribed for the Reckon One invoicing module but I am yet to issue an invoice. I will do so for the next job. So as my invoices for the last month (for work performed in September) are paid, I am assigning the incoming payments in Reckon One simply as 'income'. Unfortunately, the amount owing of $2568.94, less the retention of $1000, which corresponds to a physical payment of $1568.94, does not neatly align with any combination of the nine invoices that total $2568.94. I guess this does not matter if I write a new invoice in Reckon One for $1000 including GST, as per Glynis's suggestion, and leave it unpaid until next September. This retention should be a one off. So which account do my unpaid invoices sit it? That the payment would be next financial year confuses me a little. I am accounting for GST using the cash not accrual system.0
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Thanks for the extremely fast response!!! I have only recently set up my business in Reckon One, so I am still using my old invoicing system. I have subscribed for the Reckon One invoicing module but I am yet to issue an invoice. I will do so for the next job. So as my invoices for the last month (for work performed in September) are paid, I am assigning the incoming payments in Reckon One simply as 'income'. Unfortunately, the amount owing of $2568.94, less the retention of $1000, which corresponds to a physical payment of $1568.94, does not neatly align with any combination of the nine invoices that total $2568.94. I guess this does not matter if I write a new invoice in Reckon One for $1000 including GST, as per Glynis's suggestion, and leave it unpaid until next September. This retention should be a one off. So which account do my unpaid invoices sit it? That the payment would be next financial year confuses me a little. I am accounting for GST using the cash not accrual system.0
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this makes sense and keeps it simple. Thanks Glynis.0
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OK so you can raise 2 invoices in Reckon One. The first for the $1568.94 and another for $1000. Notate on a line of the Invoice what invoice numbers they relate to in your old system so you have an audit trail linking the 2 systems.
You take a payment for the $1568.94 in Reckon and leave the other invoice outstanding until it is due for payment. Ensure you put the due date correctly as 2016.
Because you are a cash entity you only pay or receive GST credits on actually paid invoices and actually paid creditor transactions. By leaving it outstanding you are matching the income to the correct quarters etc for reporting to the Tax Office.
Out of interest, are you relating the income you are reporting in Reckon One back to the old system so you can mark them off and know who still owes you money? Your opening balances for Debtors would not have been bought over I assume from your information.0
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