Looking for suggestions of which nominal code to use for pre-registration VAT element of past year expenses - what do you think?
1. Company year end 30 Nov 2020
2. VAT registered from 01 Jan 2021
3. Jan 2020 - Nov 2020 and December 2020 expenses posted originally as out of scope of VAT
e.g. 1/Nov/20 DR Stationery £12 gross incl. VAT and CR Bank £12
and 1/Dec/20 DR Stationery £24 gross incl. VAT and CR Bank £24
4. Journal entry for December expenses with CR for each of the affected nominal accounts and 1x DR for Purchase VAT a/c
e.g. 1/Feb/21 CR Stationery £4 and DR Purchases VAT £4
A. past year Jan-Nov expenses journal entry also CR each affected nominal accounts, and affect current year P&L
i.e. 1/Feb/21 CR Stationery £2 and DR Purchases VAT £2, noting that Stationery is a 2020-21 Revenue expenses account
B. 2nd Journal entry instead posts 1x CR to a dedicated balance sheet account, like Prepayments/Accruals
i.e. 1/Feb/21 CR Pre-registration VAT adjustments account 2019-20 £2 and DR Purchases VAT £2
what my head can't get straight is "this is not a liability, and a strange asset with only a CR posting" so where in the Chart of Accounts does it go?
Edited at 04 Feb 2021 05:26 PM GMT