In the state I live in, if you purchase an item from out of state and have it shipped in, you do not pay sales tax on the item. But the state I live in says that I must pay “Use” tax on it. This can happen quite frequently with items being bought over the internet.
For example: I buy a case of shipping labels for $20.00 from a seller in the state of New Jersey. Since I am in Arizona, the seller doesn’t charge me sales tax. I have to pay a use tax on this to the state of Arizona. This is usually paid to the state of AZ 4 times a year. Tax rate is 6% for this example.
On paper this would be my transaction for recording this sale:
Debit - Shipping Supplies Expense: $21.20
Credit - Use Tax Payable: $1.20
Credit - Bank Account for $20.00
When it would be time to make my quarterly payments, the transaction would be:
Credit - Bank Account for $1.20
Debit - Use Tax Payable: $1.20
Does anyone have a suggestion on how to do this in Manager?
Thank you for any input.