Correcting Sales Tax opening balance

We upgraded on Jan 1 to Sage 50 2015 from Peachtree 2009.  One of the effects is that all our outstanding Accounts Receivable were entered as historical entries.  It appears that they were entered on Jan 1 merely as the total due, without breaking out the sales taxes.  Now with the end of January approaching its time to pay our sales taxes.  To be done correctly, these amounts should appear on the year-end balance sheet as Sales Taxes Payable, however the history is now closed.  What is the correct way to enter these now, so that a cheque can be generated without creating an expense in January, which it isn't.

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  • 0

    Hi Skylang,

    This is the Sage 50 Canadian forum (Simply Accounting), and since the software is completely different from the Sage 50 U.S. version (updated from Peachtree), most of the users of this forum won't be able to give you any direction.

    The moderators may notice your post and move it, or you can post it in the Sage 50 U.S. forum.

    In the Canadian editions of Sage 50, sales taxes are paid using a purchase invoice or a direct payment from the related G/L account(s).  

    In order to set up the linked Accounts Receivable and get the G/L to balance, the amount of the tax due would have been included *somewhere*.  Possibly opening retained earnings is too high due to the unrecorded sales tax liability.

  • 0 in reply to RandyW

    The reason I posted in the Canadian forum is because it is the Canadian edition we are discussing.  I didn't say anything about the Sage 50 US version.  The question really has nothing to do with the Peachtree version, since the issue would have been the same even if we had migrated from a manual system.  The problem (as stated in the question) is that the history is already closed, but the sales taxes (GST and QST) collected (and paid to vendors) in 2014 were not broken out when the outstanding accounts payable histories were entered on January 1 2015 in Sage 50.  So what is the correct procedure now when we create a cheque (in January) to be paid to Revenu Québec.

  • 0 in reply to skylang

    When you used the word 'converted' I made an assumption that you converted the data, rather than setting up a new set of books.  I'm not aware of any automatic data conversion between Peachtree and Sage 50 Canadian. 

    If I understand correctly, you set up a set of books in Sage 50 2015, more or less from imported and re-keyed data? 

    skylang said:
    the sales taxes (GST and QST) collected (and paid to vendors) in 2014 were not broken out when the outstanding accounts payable histories were entered on January 1 2015 in Sage 50.  So what is the correct procedure now when we create a cheque (in January) to be paid to Revenu Québec.

    When setting up historical balances into Sage Normally you would not separate out any sales taxes, all you are recording is how much money you are owed, and from whom, and setting up the Accounts Receivable amount in the G/L.

    Did you set up the Sales Tax Payable amounts in the G/L from your previous system?  

    The balance in the G/L as of the end of the remitting period is the amount that you would pay, and record the amount paid against the G/L balance from a purchase invoice, also as of the end of the remitting period.   The payment is posted against the purchase invoice.

  • 0 in reply to skylang

    when you create an AR invoice you

     debit ar

     credit gst

     credit sales

    assuming that historical data was entered from a trial balance, the gst would have been recorded

    if not, then your sales amount is also wrong - I'm thinking you want to

       debit sales

       credit gst

  • 0 in reply to Roger L

    I believe the mistake is that the historical data was entered from the Accounts Receivable data (as a total outstanding from each client), not from the trial balance or invoices.  So the A/R data are the reflect the totals on the invoices, not sales + gst.  The problem is that if I debit sales, won't it show up as a debit in January?

  • 0 in reply to skylang

    skylang said:
    I believe the mistake is that the historical data was entered from the Accounts Receivable data (as a total outstanding from each client), not from the trial balance or invoices.

    It shouldn't matter whether historical invoices were entered as sales transactions in the prior period, or as opening balances.

    The current A/R totals should match the individual invoices.

    There's other historical data that may not have been entered, such as a Credit for Sales Tax Payable.   If that wasn't set up in the 'new' books, then the Retained Earnings from the previous period is too high, and you need to credit the opening balance of the Sales Tax payable account(s) and debit opening balance of Retained Earnings.

    Do the trial balances of your old system and the new one match?

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  • 0 in reply to skylang

    skylang said:
    I believe the mistake is that the historical data was entered from the Accounts Receivable data (as a total outstanding from each client), not from the trial balance or invoices.

    It shouldn't matter whether historical invoices were entered as sales transactions in the prior period, or as opening balances.

    The current A/R totals should match the individual invoices.

    There's other historical data that may not have been entered, such as a Credit for Sales Tax Payable.   If that wasn't set up in the 'new' books, then the Retained Earnings from the previous period is too high, and you need to credit the opening balance of the Sales Tax payable account(s) and debit opening balance of Retained Earnings.

    Do the trial balances of your old system and the new one match?

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