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Journal Entries For Accrued Income Including VAT

  • Fellow PM.Dip
  • Practice Licence
  • 65 posts
  • # 117160

Hi

I have the opening balances for a Limited Company that has accrued income shown on the debit side of the balance sheet - which is where it should be. However the accrued income includes VAT. I have debited net sales and credited accrued income which leaves me with a journal entry for VAT. Can anyone advise me as to what the VAT journal entry should be? as the accrued VAT liability is shown on the credit side of the balance sheet which I assume is the output - input VAT. Can anyone help?

 

 John 

  • Member PM.Dip
  • Practice Licence
  • 69 posts
  • # 117162

Hi John,

Usually an accrual is net of VAT. I haven't come across an accountant that has accrued the VAT liability. Do you know what the VAT tax point was, as the VAT should only be accounted for on the tax point? Can you check this with him/her?



Edited at 08 Oct 2018 05:29 PM GMT

  • Fellow PM.Dip
  • Practice Licence
  • 65 posts
  • # 117188

Hi Helen

Thank you for your reply which was most helpful. The accrual it turns our is income and excludes VAT..


John

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