I hope i can find an answer to this tricky situation as I am not experienced in bookkeeping and have just started only to find this hiccup. I work in Pastel Express V11.
Our company pays monthly rent and has added the lessor as a supplier (this lessor is VAT registered)
There are 3 accounts related to the lessor. The supplier account in the lessor's name, VAT/Tax Provision Account - Withholding Tax (will explain this after) and in the GL there is a "rent paid" account.
I have fixed up the supplier account and the withholding tax account but my main question is how to link the rent paid account with the supplier account. This is how the previous bookkeeper had set it up but i just cant get my head around it. When you make the supplier invoice it goes to the rent paid account in the GL but when you do the payment how does the payment show in both accounts? Sorry I don't know if I was blonde in another life! Does the rent paid just show the invoices entered (excluding VAT) and not the payments or do you put it as a contra account?
This is where it gets complicated. I work in Botswana and there is a new law that the lessee pays 5% withholding tax to the revenue service on behalf of the lessor. So this gets deducted from the subtotal of the rental invoice and you pay it directly to the revenue service. This is the other account.
Rent Subtotal = 32500, Total incl VAT= 36400. 5% Withholding TAX=1625. Total paid to lessor= 34775. Total paid to BURS (Revenue Service)=1625
The Supplier Account i have amended as follows:
01/03/11 Purchases KAI10250 Supplier Invoice 36,400.00
01/03/11 Capital Payments Discount 1,625.00
30/03/11 Capital Payments 100205 34,775.00
The VAT/Tax Privision Account - W/Hold Tax
01/03/11 Capital Payments 5% from Rent Invoice 1625.00
30/03/11 Captial Payments Chq 100325 5% Paid 1625.00
So I every time i enter the supplier invoice I then make discount for the 5% wht. Then the next line I credit it to the W/Hold Tax acc. All done in the cashbook. Is this correct?
Then when the supplier invoice is made it goes to the "rent paid" account for 32,500 excluding the VAT. This this account need the payments to show. I tried going to the supplier journal and putting in the payment there to the supplier and contra account to "rent paid" account. However this shows the full payment amount of 34775.00 and not the amount excluding VAT. What is the correct way to enter this?
Thanks so much if you could help me.