Interest received from Inland Revenue on GST Refund
I have received a GST refund from Inland Revenue, which includes interest over and above the return amount, for paying early. My problem is not with the original GST entry but when I enter the journal entry to clear GST collected and GST paid accounts for the return. I enter the GST collected amount, the GST Paid amount and then the GST Payments/Refunds amount (which is what I actually received). I am obviously left with the small amount of interest paid by IRD which needs a Credit transaction to balance the entry.
My best thought is to enter a Credit to GST Payments & Refunds and memo it Interest Paid by IRD.
Would welcome any suggestions on how others have dealt with this?
Hi Meg
Your interet should be credited to an income account - generally in the 8-xxxx, Other Income section, and specifically called Interest Received. If you put it to a GST account it will wrongly sit in the balance section when it is an income to the business.
Hope this helps
