and now let's see what happens when we put sales tax on a sales receipt what's the
result of charging sales tax well the sales tax payable account and the chart of accounts will
increase the agencies or vendors balance of what we owe them will increase the customer
obviously will pay more but let's take a look at the file before we record the transactions
with sales tax we can open the main report the trial balance push a for all and we can see that
we already have twenty one thousand eight hundred twenty dollars in income before we
activated sales tax the other important report is under vendors sales tax sales tax liability
push a for all and you can see that the total sales so far are all non-taxable twenty 1820
but of course these reports will change as soon as we record a sale and include sales tax for
example let's imagine on January 9 we did 10 hours of video for Allen RB and Allen paid us
with check number 61 from the main menu click customers enter sales receipt the date is back
on january 9th the customer is Allen RB notice New York state sales taxes what's here after we
choose the customer Allen RB the check number that he gave us was 61 the item of service was video 10
notice there's 240 dollars in tax for a three thousand dollar video job because New York State
charges eight percent three thousand is what we've earned in video income and two hundred
and forty dollars is what we owe in tax after we click Save and close you can click yes to refresh
the reports and you can see sales tax payable shows up for the first time in the trial balance
as two hundred and forty dollars you will also notice that New York state tax shows up as two
hundred and forty dollars New York state tax for the taxable sale of three thousand so the first
twenty four thousand eight hundred and twenty dollars of income in this file were non-taxable
sales and this three thousand that we just earned right now our taxable sales and the amount of the
tax for New York State is two hundred and forty dollars now you don't always have to agree with
the defaults for example imagine on January 10 we did twelve hours of editing for Betty
Boop and she paid cash Betty's tax is New York but just on this invoice we're going to change
the tax to New Jersey to see what it looks like from the main menu click customers enter sales
receipts the customer is Betty Boop and as you notice we set up Betty to have New York
state tax the date was January 10 and she paid us cash the item was editing and the quantity
was twelve now right now the tax says a hundred and thirty four dollars that's because it's set
for New York state tax but what I'd like to show you is at the moment you make the receipt you can
change it to New Jersey tax and it will become a you can change it to 6% instead of 8% and it
will adjust the tax and the total of the receipt will be just adjusted accordingly now if this is
New Jersey tax $100 and the sale itself is 1680 let's click Save and close and we get this more
warning do you want to permanently change Betty Boop's tax well the instructions specifically said
that it would only be for this invoice so in this example we will click no now when we look at the
trial balance and we see sales tax payable sales tax payable has increased when we double-click
we can see that we have 240 dollars in sales tax from the January 9 invoice and $100 in sales tax
from the January 10 invoice when we look at the sales tax liability report we can see that we now
have four thousand six hundred eighty dollars in taxable sales compared to the twenty one thousand
eight twenty that was earned before we activated the sales tax but the most interesting thing is
this column tax collected a hundred dollars of new jersey tax two hundred and forty dollars of
new york tax equals a total of three hundred and forty dollars and eighty cents sales tax which
is equal to the trial balance sales tax payable three hundred and forty dollars so the sales tax
payable and the trial balance shows the total tax owed whereas the sales tax liability report
shows how much each part of that three hundred and forty dollars is owed to the different tax
agencies let's try one more imagine on January 11 we did 14 hours of video for candy who paid
us check number 22 now let's change her tax to New York and make it permanent from the main
menu click customer enter sales receipts we make the date January 11th she gave us check number 22
and the customer is candy now notice as soon as we chose candy Charles New Jersey tax came up at the
bottom of the invoice because that's what we set as Candy's defaults in a previous video the item
was video and the quantity was twelve let's just double-check the instructions oops fourteen that's
okay and of course she's taxable for New Jersey tax two hundred fifty two dollars but if we change
her tax to New York state tax notice the amount increases because New York tax is eight percent at
the moment we click Save well before we click Save & close notice it's three hundred and thirty six
dollars that will increase New York state tax owed and also increase the general sales tax payable at
the moment we click Save and close we get the warning message that we changed candy Charles
tax item would you like to have this information appear next time if we click yes that means the
defaults are changed for candy in the customer center and now candy has New York state tax
notice sales tax payable increased by the amount of tax from that sales receipt and when we come
back here we see that the reason why the trial balance shows six hundred and seventy six dollars
in sales tax payable is because this six hundred and seventy-six sales tax payable is split between
a hundred dollars owed to New Jersey and five hundred and seventy six dollars owed to New York