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a recipient created tax invoice or an RCT I for short is an invoice provided by a customer to the business rather than by the business to the customer because the customer is in the better position to know all the inputs and costs a wreckin accounts so the transaction cannot be recorded in just one transaction we'll use the example of a wheat farmer who contracts a grain merchant to sell his harvest and received a payment from the merchant of the proceeds of the sale lest the costs incurred before we start processing check that you have the required accounts like a sales account expense account for each of the expenses incurred and for our example Commission transport storage and importantly a dummy bank account we'll call the RCT eye clearing account you'll also need some items like a sales item like wheat linked to your sales income account and discount items for the expenses linked to the RCT eye clearing account you should also check that your receive payments are automatically been assigned to undeposited funds to create your RCT i go to customers enter sales receipts select the RCT i clearing account as a deposit to account select the customer the date and the sales item quantity with a relevant rate and tax code next at the expense items beneath this entering the relevant rate but do not add tax codes to your expenses on this form we'll do it later on another form save and close the sales receipt you have now entered your recipient created tax invoice to recognize your expenses and their GST go to banking and write checks select the RCT I clearing account as the bank account the payee should be the merchant who provided you with an RCT I set the date to be the same as your RCT I make sure that amounts includes tax is ticked on the expenses tab add your expenses account using the same amounts for each expense you use on the RCT I and ensure the relevant tax code is selected for each expense the total of this check should match the total of the expenses on your RCT I save and close the check to complete the process transfer funds from your RCT I clearing account to your normal bank account click banking and transfer funds and the date using the same date as the RCT I in check select the RCT I clearing account as the transfer from account on your bank account as the transfer to account and the amount of the RCT I after expenses save the transfer you can now see the balance cleared from your RCT eye clearing account in the chart of accounts and the amount received from the merchant in your main bank account if you have any further questions on this process please go to www.hsn.com