 In this presentation, we'll record a transaction related to sales tax. In other words, we've been collecting sales tax on those sales where collection is applicable. Now we're going to be paying the sales tax to the relevant agency. Let's get started with Sage 50 Cloud Accounting. Here we are in our Get Great Guitars files. We're currently in the vendor and purchases section. I'm going to go on up to the customer and sales section. You'll recall in prior presentations that we had set up the sales tax. When we think about sales tax, there's kind of two processes for it. One, we need to think about when we need to collect sales tax, and we need to set up the sales tax, which we have done in prior presentations. As we have set up the customers, we set up the sales tax. Then when we made sales, we had to charge sales tax when applicable, particularly when we have the invoice. Let's go ahead and open up an invoice and say if I have a new invoice. Now remember in the United States, sales tax is not a federal tax, but a state tax. It's going to be something that's going to be a state or local, anything other than the Fed could tax you on it. It could be state or local. That means it's going to change from place to place in terms of the rate for the sales tax. You're going to have to make sure that you've got the right rate and when it's going to be applicable. Normally in the United States, it's going to be applicable, not on service items, but on inventory items. So if you sell inventory items, that's typically when you're going to have the sales tax. So for example, when we think if we just I'm not going to record this, by the way, I don't record this, but if I just open up and create an invoice, then you'll note that we're charging in this case the 550, but the sales tax then if I was to charge the sales tax is 9.5%. That's the 52 25. So as we've seen in the past, what happens when we record this, we're going to collect the 602 25, including the sales tax, but we only record on the income statement 550. And the difference between the two goes into a payable account, the 52 25. Now that could be a little bit confusing to people because you might think, you know, why don't I charge revenue at 602 25 and then charge the tax as like an expense sales tax expense. So the net would still be the net effect on the income statement would be the 550. And we don't do that because really the idea here is that the sales tax is not something that's going to be part of the business expense. It's supposed to not be a business expense, it's a tax on the customer. So even though it's still the same thing, again, economically, it's basically pretty much a business expense, right? But in any case, that's the idea, right? So when it's a tax on the customer, so it doesn't touch the income statement really, it goes right to the liability. We just happen to have to collect the sales tax for the government. It's kind of like the idea. So it doesn't go on the income statement, it's a payable account. So then you got to think about, well, when are we going to pay it? Now we're going to have this payable account of the 52 on there. That's going to depend on the agency that you have. So which agency are you dealing with and how much sales tax do you have? Typically, if you make a lot of sales, then the government wants their money sooner. They're saying, hey, they're doing well. I want my money now. But if you have less sales, then they may give you more time. So you may only have to do like process your sales tax once a year or something and pay it if you don't have that many sales. The more sales you have, you might have to do it quarterly. In other words, you might make sales all the way up through January, February, March, a fourth of the year, three months. And then you'd have to pay it probably before the end of April, right? And so for our practice problems, since we're only running two months, we're going to imagine a scenario that doesn't happen too often in the States, but it's the same idea. We're going to say that the sales tax is going to be monthly. So the month of January, we're going to be paying in February. Now, again, it's more likely that you're going to have to pay like quarterly or something like that. But we're going to do it monthly here. So we're going to say the sales tax that we accumulated upwards in January is something we're going to have to pay in February. So how would we then look at that? Well, we can run a report for that. We can say, OK, let's close this back out. Let's say no. And then we're going to go to the reports up top. We're going to go down to our balance sheet reports. Let's go into the financial statements. Let's go open up the balance sheet. So we're going to open up the balance sheet. It's going to be for February. So February. So I'm going to say, OK. And then we're going to go down to the payable accounts where we have the sales tax. So there's the sales tax. So if I double click on the sales tax payable, this is what has been accumulated upward. We're at 414.90 as of the end of February. If I go to the options up top and I bring this on back to January. So I'm going to say I'd like to include January and then say, OK. So now we've got January and February. So we're 414.90. But really, we have to pay January as of the end of February. So the sales tax that was collected in January adds up to this 234.40. That's what's due by the end of February. So that's what we're going to write the check for. We're going to write it for the 234.40. And then we're still accumulating up in February, which we're going to have to pay in March under our scenario. Again, note in practice, it's probably more likely that you have to pay quarterly. In other words, you do the same process, but you'd be accumulating upwards from January, February, and March. And then you have to pay it in April. So you have to pay that three quarters by April, possibly. That would be the system. But we're going to pay January in February. OK, so we're going to write a check in essence for that 234.40 to the government. So we're going to say, all right, government. We're going to go over here and we're going to say that we're going to write a check. So we're going to go into the vendors section. And let's go ahead and say we're going to say write a check. And we'll say it's a check. And so we're going to say that this is, I think we put it in here as the California tax collector. Again, that's a made up vendor, but whatever agency you have to pay the taxes to, depending on where you are at, that's who you would pay the taxes to. Then we're going to process this out. I'm just going to put a random number up top and I'm going to put this as of the 29th. And the amount that we're going to be paying is once again, that 234.40, 234.40, 234.40. So there it is. And there's the sales tax. You might want to memo sales tax for January. And then I'm going to say this is going to come out of the checking account. So we want to take that out of the checking account, not the cash on hand account. So that should be coming out of the checking account like that. And then the other side is going to be going to the sales tax payable. So that's correct. So what's going to happen here? The cash counts going to go down. The other side is going to go to sales tax payable, which will decrease the amount of sales tax payable representing the fact that we don't owe as much of the sales tax payable at this point in time, only the amount that has accumulated upward for the month of February because we will have paid off the month of January. So let's go ahead and save that. Then close this out and check it out. So we're going to go back on over and let's take a look at our report here. Now this was the detailed report. I refreshed the detailed report. And you can see our payment now for the 234.40, which matches of course the 234.40 that accumulated in January, which means that we're left with just the accumulation in February. So if I close this back out then, and if I just go to the balance sheet report, balance sheet report, and we refresh the balance sheet report, we still have an amount due in the sales tax payable account. We should. Where did it go? There it is. I found it. But that's what is due in February and that accumulated up in February and we're going to pay that in March. So that's the general concept with relation to the sales tax payable. No effect on the income statement for the making of the payment here. Really no effect on the income statement for the sales tax because like we say it's going to be assumed that it's paid by the customer and therefore we take it out and we put it on the balance sheet even as of the point of sale is typically the way it's supposed to work. So that's going to be it for now. Let's get out of here.