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• # 71835
• Tue 07 Jun 2011 08:24 AM

i have this question

(1)        He paid his business Stationery bill by cheque 5^th April 2011 £171.55

 (inc VAT)

Process this payment to the relevant account in the ledger,

As this says the bill has been been paid, would i need to use the vat account. not sure if the vat account has been debited already.

1st thought i would credit bank gross and debit stationary net.

any help would be great?

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• # 71836
• Tue 07 Jun 2011 09:01 AM

Do you have an outstanding bill for £171.55?  If yes, then debit the creditor and credit the bank with the gross amount.

If there is no outstanding creditor, debit the stationery with the net amount, debit the input VAT account with the VAT and credit the bank with the full amount.

• BKN Book-keeper of the Year 2013!
  
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• # 71837
• Tue 07 Jun 2011 09:12 AM

Mad Liz said:

“Do you have an outstanding bill for £171.55?  If yes, then debit the creditor and credit the bank with the gross amount.

If there is no outstanding creditor, debit the stationery with the net amount, debit the input VAT account with the VAT and credit the bank with the full amount.

”

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• # 71859
• Tue 07 Jun 2011 03:49 PM

Hello,

I would process the transations as follows (the same as Liz said) :

Nominal Ledger
Bank A/C: CR £171.55
Stationery A/C: DR £146.00
VAT A/C: DR £25.55

Hope this helps. 

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• # 71864
• Tue 07 Jun 2011 04:31 PM

Annasweetbaby said:

“Hello,

I would process the transations as follows (the same as Liz said) :

Nominal Ledger
Bank A/C: CR £171.55
Stationery A/C: DR £146.00
VAT A/C: DR £25.55

Hope this helps. 

---

Anna

Edited at 07 Jun 2011 03:51 PM GMT”

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• # 71917
• Wed 08 Jun 2011 02:22 PM

Yes - I think most of practice cases are based on VAT @ 17.5%, but watch out in real exam, I think I start to get into a habit now....which is no good.

Good luck to your studies, Will

Anna

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