VAT Declaration Point Set to Invoice for Debit and Credit Items

This example has two scenarios:

• Writing off a debit item.

• Writing off a credit item.

Writing Off a Debit Item

A 105.50 EUR invoice, including 5.5 percent VAT, is sent to the customer, and then the item is written off.

Here are the accounting entries:

1. When the invoice is sent to the customer:

   Accounting Entry	Debit	Credit
   Accounts Receivable	105.50
   User-defined (Revenue)		100.00
   VAT Output Final (VO)		5.50

2. When the item is written off:

   Accounting Entry	Debit	Credit
   Accounts Receivable		105.50
   Write-Off	100.00
   VAT Output for Write Off (VOW)	5.50

Writing Off a Credit Item

A 105.50 EUR credit, including 5.5 percent VAT, is written off.

Here are the accounting entries:

1. When the credit item is created:

   Accounting Entry	Debit	Credit
   Accounts Receivable		105.50
   User-defined (Revenue)	100.00
   VAT Output for Credits (VOC)	5.50

2. When the item is written off:

   Accounting Entry	Debit	Credit
   Accounts Receivable	105.50
   Write Off		100.00
   VAT Output for Write Off (VOW)		5.50