VAT Declaration Point Set to Payment, Prepayment Offset on Maintenance Worksheet

This example applies when the VAT declaration point is set to payment, the advance payment is offset on the maintenance worksheet, and VAT transactions must be generated. The example has the following conditions:

  • An advance payment of 1,196.00 EUR is received, and the standard VAT rate is 19.6 percent.

  • An invoice with the total 1196.00 EUR, including 19.6 percent VAT, is sent to the customer.

  • The prepayment is offset against the invoice on the maintenance worksheet.

Here are the accounting entries:

  1. When advance payment is created:

    Accounting Entry Debit Credit

    Cash

    1,196.00

     

    Advance Payments Received (AR)

     

    1,000.00

    VAT Output Final (VO)

     

    196.00

  2. When the invoice is sent to the customer:

    Accounting Entry Debit Credit

    Accounts Receivable (AR)

    1196.00

     

    User-defined (Revenue)

     

    1,000.00

    VAT Output Intermediate (VOI)

     

    196.00

  3. When advance payment is matched against the invoice on the maintenance worksheet:

    • These are the item distribution lines:

      Accounting Entry Debit Credit

      VAT Output Intermediate (VOI)

        196.00

       

      Maintenance Control

      1,000.00

       

      Accounts Receivable (AR)

       

      1,196.00

    • These are the prepayment distribution lines:

      Accounting Entry Debit Credit

      Advance Payments Received (AR)

      1,196.00

       

      Maintenance Control

       

       1,000.00

      Advance Payments Received (AR)

       

      196.00