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what should be the accounting treatment if sales tax invoice is issued prior to supply of goods

Adnan Qureshi's Profile

Answers

(Agent, JKS Solutions, Inc.) |

If goods have not been delivered, there is no liability for payment. Not sure what you are asking.

Adnan Qureshi
Title: Auditor
Company: Rao & CO
(Auditor, Rao & CO) |

Yes, right it was the same scenario, goods were not dispatched but invoice was send to customer due to Miscommunication and our tax department has taken input tax.... and i was arguing with them that we can not record this sale and liability.......

Thanks for your answer

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

In addition, Sales Tax is only due when the cash has been collected, so booking the potential liability and having a true liability has timing issues involved.

Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

We use receivors as part of our backup. You can try posting the invoice as a liability which gets reclassed to expense and tax when the goods arrive. (If we feel it is necessary, we post the invoice date as the date received, and note the actual invoice date and force the due date to correct terms.) This can make it easier in case of audit. The states are picking up on audits and trying to explain this stuff to them over a prior three year time frame will do nothing but get them confused.

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