Holdback refers to an additional payment made to the dealer by the factory (applied to new stock items only) once the stock item has been sold. It is tracked via the stock card, and is not actually taken up as income until such time as the stock item is sold, even though it is shown as Receivable before then.
From the Detail tab select the Holdback button. The stock item Vendor card will be displayed, enter the GST Exclusive amount of Holdback due. A General Journal will be created dated same as the Purchase date debiting Holdback Receivable (asset), and crediting Deferred Holdback (liability). |
When the stock item is marked as sold the Sales Journal includes two additional line items to account for Holdback: debits the Deferred Holdback liability account, and credits the Holdback Income account for the GST ex amount. Note that the amount is still in the Holdback Receivable account. |
To record the receipt of Holdback, simply enter the date of receipt in the Holdback button on the stock card. A Receipt journal will be created debiting the main bank account for the GST Inc amount, and crediting the Holdback Receivable account. |
Three linked accounts are required in order to record Holdback: Asset: Holdback Receivable account stores the value from when it's entered on the stock card until it's marked as paid Liability: Deferred Holdback account stores the value from when it's entered on the stock card until the stock card is sold Income: Holdback Income account records the value once the stock card is sold. Ensure separate accounts of the appropriate type are used for Holdback, not just one account. |