Journal Entry for Sales Tax Adjustments
I'd like some advice please on how to make an adjustment in Wave.
Here in New Zealand, we have a Sales Tax called GST. I've got that set up in Wave, and it's working great.
My first GST return is coming up later this month, and I need to make an adjustment for the personal component of vehicle use. In NZ we keep a vehicle log for the 3 months, and that allows us to calculate the % of business/personal use.
I am recording the vehicle related transactions as a simple 100% deductible. We then need to make an adjustment at the end of the period reducing the expense and increasing Owner Investment/Drawings by the same amount. But we also need to make the same adjustment to GST, effectively increasing the GST we need to pay.
I've experimented but couldn't get it to work using a journal.
I could go into each transaction and edit the split, but I'd rather not do that - it would be a lot of work.
I have managed to get it to work by creating a deposit in the Cash on Hand account, categorising it as a refund for expense, and marking it as GST inclusive. It seems like a bodge to me, but it's acceptable because I don't account for cash, and simply balance it off to zero periodically with a journal.
Here are some sample figures to demonstrate:
For the period I've spent $1000 GST exclusive on fuel & that is what is recorded in Wave. Added to that is $150 GST paid. But I'm only allowed to claim 75%. So the actual GST exclusive amount should be $750, and GST should be $112.50. So I need to reduce Fuel expense by $250, and GST paid by $37.50.