VAT Declaration Point Is Set to Invoice

This example has two scenarios:

• Refunding a credit item at the customer's request.

• Refunding a credit item when the customer overpays.

Refunding a Credit Item at the Customer's Request

A 150.00 EUR invoice, including 8.25 EUR VAT, is sent to a customer, and the full amount of the overpayment is put on account.

Here are the accounting entries:

1. When the credit item is entered:

   Accounting Entry	Debit	Credit
   Accounts Receivable		150.00
   User-defined (Revenue)	141.75
   VAT Output Final (VOC)	8.25

2. When a customer requests a refund:

   Accounting Entry	Debit	Credit
   Accounts Receivable	150.00
   Refund		150.00

Refunding a Credit Item When the Customer Overpays

A 100.00 EUR invoice, including 5.50 EUR VAT, is sent to a customer. Then the following occurs:

• The customer overpays the invoice by 150.00 EUR.

  The overpayment is put on account as a credit item, and no VAT is assessed to the money on account.

• The money placed on account is refunded.

Here are the accounting entries:

1. 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

2. When an overpayment is put on account as a credit item:

   Accounting Entry	Debit	Credit
   Accounts Receivable		100.00
   Cash	250.00
   AR (Charged to OA Account)		150.00

3. When the money placed on account is refunded:

   Accounting Entry	Debit	Credit
   Accounts Receivable	150.00
   Refund Control		150.00