Hi I’m Mages, accountant.
We currently expose ourself into new accounting software, called xero.
Saw some of your tutorial video in youtube.
I just have a question, would be more grateful if you could help to clarify me.
Example of scenario:
Dr. Trade receivable- Victory 1,000
Cr. Revenue 1,000
Few days later, the Company received a payment from Victory amounting SGD950 after withholding tax 5%.
Dr. Bank. 950
Dr. Withheld tax by customer/ withholding tax expense* 50
Cr. Trade receivable – Victory 1,000
How to record this entry in xero?
Hi Mages, whenever you receive a payment from a customer for an open invoice, you need to go into Xero and record the payment against the open invoice. In this case, it looks like you received $50 less than the original invoice amount.With that said, you need to adjust the invoice amount to reflect the $50 deduction for taxes. If possible add a line to the invoice for the tax amount and make sure it goes to the correct tax account.
If you are unable to add a line to the invoice, then record the payment for the full $1000 and then record a journal entry to increase the tax account and reduce the bank account by $50.
Below is a video of how to receive customer payments in Xero:https://fitsmallbusiness.com/receive-payment-xero-course/
Crystalynn Shelton, CPA