VAT Calculations for Credits That Offset Debits
This topic offers a scenario of credits used to offset debits when the VAT declaration point is set to Invoice and the VAT recalculation flag is set to Y or N, with no discount. The scenario has the following conditions:
A 100.00 EUR invoice, including 5.5 percent VAT, is sent to the customer.
The customer has a 100.00 EUR credit.
The customer's credit is used to offset the amount of the debit.
Here are the accounting entries:
When the invoice is sent to the customer:
Accounting Entry
Debit
Credit
Accounts Receivable
100.00
User-defined (Revenue)
94.50
VAT Output Final (VO)
5.50
When the customer has a 100.00 EUR credit:
Accounting Entry
Debit
Credit
Accounts Receivable
100.00
User-defined (Revenue)
94.50
VAT Output for Credits (VOC)
5.50
When the customer's credit is used to offset the debit:
Accounting Entry
Debit
Credit
Accounts Receivable
100.00
100.00
Maintenance Control
100.00
100.00