VAT Declaration Point Set to Invoice with the VAT Recalculation Flag Off

This example assumes the following conditions:

  • A 4,640.00 EUR invoice, including 16 percent VAT, is sent to the customer

  • The payment is applied against the invoice before the discount due date.

    A 2 percent prompt payment is applied.

Here are the accounting entries:

  1. When the invoice is sent to the customer:

    Accounting Entry Debit Credit

    Accounts Receivable

    4,640.00

     

    User-defined (Revenue)

     

    4,000.00

    VAT Output Final

     

    640.00

  2. When payment is received and applied against the invoice:

    Accounting Entry Debit Credit

    Cash

    4,547.20

     

    Accounts Receivable

     

    4,547.20

    Customer Discount (2 percent of 4,000.00)

    92.80

     

    Accounts Receivable

     

    92.80