VAT Declaration Point Set to Invoice for Underpayments and Overpayments

This example has two scenarios:

• Writing off an overpayment.

• Writing off an underpayment.

Writing Off an Overpayment

A 105.50 EUR invoice, including 5.5 percent VAT, is sent to the customer. The customer overpays the amount by 10.00 EUR, and the amount overpaid 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 customer overpays the amount:

   Accounting Entry	Debit	Credit
   Accounts Receivable	10.00	115.50
   Cash	115.50
   Write Off		9.45
   VAT Output Final (VO)		0.55

Writing Off an Underpayment

A 105.50 EUR invoice, including 5.5 percent VAT, is sent to the customer. The VAT declaration point is set to payment. The customer underpays the amount by 10.00 EUR, and the remaining amount due 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 Intermediate (VOI)		5.50

2. When the customer underpays the amount:

   Accounting Entry	Debit	Credit
   Accounts Receivable		95.50
   Cash	95.50
   VAT Output Intermediate VAT (VOI)	4.98
   VAT Output Final (VO)		4.98
   Accounts Receivable		10.00
   Write-Off	9.48
   VAT Output Intermediate VAT (VOI)	0.52