Partial Payments Result In Partial Payables
The previous example showed the entire tax holding amount being transferred to the tax payable account. The entire holding amount was transferred because the contract was paid in full. If a partial payment is received, only part of the holding amount will be transferred to the payable amount (proportional to the amount of receivables reduced by the payment). An example will help make the point.
| Event | GL Accounting | Tax Payable Balance | Tax Holding Balance |
|---|---|---|---|
| Bill segment created |
A/R 110 Revenue <100> Tax Holding <10> |
0 | (10) |
| Partial payment received |
Cash 27.50 A/R <27.50> Tax Holding 2.50 Tax Payable <2.50> |
(2.50) | (7.50) |