Tag Archives: software

Amending GST amount on Purchase Invoice

Software: MoneyWorks accounting software

There are two methods of computing the GST on Tax Invoice when the invoice contains more than one item with the standard rated supplies. The line item method, which commonly used in accounting software; this method computes the GST on each line item and then sums up the GST amount. The second is a subtotal method, which calculates GST based on the total payable.

Document Preferences

Assuming you sold 9 pieces of product A at $13.98 each and 7 pieces of product B at $17.38 each.

Method one (the line item method):

9 x Product A @$13.98 = $125.82 x 7% GST = $8.80
7 x Product B @$17.38 = $121.66 x 7% GST = $8.51
Total GST = $17.31

Method two (Subtotal method):

9 x Product A @$13.98 = $125.82
7 x Product B @$17.38 = $121.66
Subtotal: $247.48
7% GST = $247.48 x 7% = $17.32

Amend GST

Both methods of computing the total GST are acceptable so long as you apply the chosen method consistently.

IRAS Calculating GST on invoice

Due to a different method used or rounding between two systems, the GST amount on supplier invoice may differ from your entry. You need to set to show tax column from the MoneyWorks Document Preferences to allow amending the GST amount on Purchase Invoice transaction. A warning message may prompt when printing the GST report, and the report highlights those transactions in question.

Sign up a free demo to find out more about how to use MoneyWorks for your business.

Undo Bank Reconciliation

Software: MoneyWorks accounting software

Bank reconciliation is a periodic process to match the bank statement against the information you have recorded in the accounting system. Besides being a fraud control tool, it picks up error such as omitted entry, an incorrect amount recorded, duplicated information has recorded, has recorded transaction into a wrong financial period, etc.

Assuming you invoiced Customer A and Customer B with the same amount $321. Then, you accidentally knock off the payment received from Customer B against the Customer A’s outstanding invoice. You can use the cancel transaction function to reverse the entry and enter a receipt from Customer B to correct it.

Screenshot 2020-02-12 at 4.14.34 PM

Alternatively, you can also use the ‘undo’ bank reconcile method if there are many mistakes made in the reconciliation. From the Bank Reconcile wizard, click the ‘load old’ button and select the previous bank reconciliation. Then, click the gear icon at the bottom of the wizard and select the ‘clear all reconciliation from this one…’ option. Assuming you have reconciled from January to June, and discover a mistake in March. You have to undo the bank reconciliation one month at a time from June to March.

MoneyWorks is a small business accounting system which can install locally or hosted it in a Cloud. Contact us to find out more about using MoneyWorks for your business.

 

Customer Accounting for Prescribed Goods

Software: QuickBooks Desktop accounting software

The rule of Customer Accounting for Prescribed Goods applied when supplying of mobile phones, memory cards and off-the-shelf software exceeds $10,000 to a GST-registered customer for his business purpose.

A customer accounting tax invoice has to issue to your customer if you are a GST-registered supplier supplying prescribed goods. The invoice has to include:

a. Your customer’s GST registration number,
b. A statement to inform the customer that your sale is subject to customer accounting. He has to account for the GST on the sale and the GST amount.

Customer Accounting

There are a few things you need to set if you are using QuickBooks desktop to issue a customer accounting invoice. You first have to create a new GST code (such as CAS – Customer Accounting) and link it to a new GST item for Customer Accounting with 0% rated. Next, consider using the Business Number field in the debtor profile page for the customer’s GST number and add it to the invoice template. Create a new Customer Message for Customer Accounting statement, such as ‘Customer accounting: Customer to Pay GST** to IRAS’. This message should add to the invoice template too. Finally, enter the GST amount manually in the invoice description (below the last item) or a custom field if you prefer.

The ‘taxable amount’ of the Customer Accounting GST should include in the Box 1 of the GST Return. No GST includes in the Box 6 of the GST Return as there is no Output Tax in this case.

QuickBooks Invoice

As a GST-registered customer, you can claim the Input Tax purchase if you satisfy the input tax claiming condition. The input tax shows in the report when you enter a Bill with the relevant GST code. You need to include a Customer accounting Clearing account (an Other Current Liabilities account) in the Bill to balance up the payable amount.

QuickBooks Enter Bill.png

The double-entry of the bill transaction debit the Expenses account 15000, the GST input 1050, and credit the Customer Accounting Clearing account 1050.

You need to record the output tax on your supplier behalf via a dummy Sales Receipt (or sales invoice). Use a dummy item which links to the Customer Accounting Clearing account to record the output tax.

QuickBooks Sales Receipt.png

The receipt credits the Customer Accounting Clearing account 15000 and the GST Output Tax 1050, and then the second line item debits the Customer Accounting Clearing account 16050.

The ledger of the Customer Accounting Clearing account:

Credit Enter Bill 1050
Credit Receipt 15000
Debit Receipt 16050

With a little tweak, you can still use QuickBooks Desktop to record a Customer Accounting transaction.

Sign up a demo to find out more about QuickBooks Desktop accounting system.