Accounting Entry Example 3: Prepayment with 100% VAT on Payment

This scenario assumes:

• Prepayment for 1000.00 EUR.

• Applied regular voucher for 11960.00 EUR.

• VAT declaration point is payment.

Prepaid Voucher

Accrual (voucher posting):

Description	Account	Debit	Credit
Prepaid Expense	122000	1000.00 EUR	N/A
VAT Intermediate Recoverable	206300	196.00 EUR	N/A
Accounts Payable	200000	N/A	1196.00 EUR

Payment (payment posting):

Description	Account	Debit	Credit
VAT Intermediate Recoverable	206300	N/A	196.00 EUR
VAT Input Recoverable	206103	196.00 EUR	N/A
Accounts Payable	200000	1196.00 EUR	N/A
Cash Distribution	100001	N/A	1196.00 EUR

Applied Regular Voucher

Accrual (voucher posting):

Description	Account	Debit	Credit
Expense Account	631000	10000.00 EUR	N/A
VAT Intermediate Recoverable	206300	1960.00 EUR	N/A
Accounts Payable	200000	N/A	11960.00 EUR
Prepaid Expense	122000	N/A	1000.00 EUR
VAT Intermediate Recoverable	206300	N/A	196.00 EUR
Accounts Payable	200000	1196.00 EUR	N/A

Payment to supplier for 10764.00 EUR.

Payment (payment posting):

Description	Account	Debit	Credit
VAT Intermediate Recoverable	206300	N/A	1764.00 EUR
VAT Input Recoverable	206103	1764.00 EUR	N/A
Accounts Payable	200000	10764.00 EUR	N/A
Cash Distribution	100001	N/A	10764.00 EUR