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I am processing a prepaid income, lets say $11,000 inclusive GST received in june. The journal would be like this
Db. Bank 11,000
Cr. prepaid income $5,500 gst
Cr. income account $5,500 gst
Next month I will be processing an adjusting journal as follow:
Db. prepaid income 5,500 no allocation for gst
cr income account 5,500 no allocation for gst
Please let me know if it is correct to allocate gst in the first journal for prepaid income or I should allocate gst in the prepaid income in the second journal. We report BAS on cash basis. I am just wondering if we should allocate gst for the full amount received for prepaid income.
Thanks in advance,
I recall that you do the accounting for a Club.
If this is correct, you should be speaking with the Auditor.
I would suggest that GST is payable at the time you are legally entitled to the Income.