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Deferred Property Tax

A B's Profile

I have been going rounds with this and need some help to make sure that my books are accurate. For simplicity's sake, my yearly property tax bill is 12k. Our state allows us to pay in 3 installments, which we do. This bill was entered as 3 separate invoices in Sage 300, which resulted in a DR to Accrued Property Tax (G/L 2450) and CR to Accounts Payable (G/L 2100). So now the 2450 account has a debit balance, which is not correct. This liability account should show a credit balance of 12k. I can't change the default account that AP invoices go to for this particular instance, nor do I think that is a wise move.

If the bills had been coded to Property Tax Expense, that would over-inflate the expense account so that doesn't seem viable. I should be expensing the deferment to the Property Tax Expense account each month, right?

So hence my dilemma and why I am seeking input from anyone who has some insight on this situation.

Thank you in advance for your help!

Answers

Wade Senti
Title: Accountant
Company: AML
(Accountant, AML) |

There’s a couple ways to do this (mind you, I am thinking in QuickBooks world). For QB, I would create a chart of account related to an expense account and a payable account associated with this activity.

Given you know the total amount due for the period, I would enter general journal entries for the accrual on a monthly basis.

At the point that you must remit payment (invoice), enter the payable account for the bill, which should match the amount accrued. Entering should reduce your accrued payable, and momentarily increase your accounts payable with it paying paid almost simultaneously.

This allows you to account for these activities both properly for the period and also match your billing needs.

(Please clarify if facts are different)

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