On 8/16/2020 3:54 AM, Omer Hayat wrote:
Hi.
We have a 5% VAT charged on all bills and invoices. To the government, we pay
the difference.
I have setup an 'Input VAT(paid to Vendor)' and 'Output VAT(received from
Customers)' accounts under Liabilities, and set them up. These are recording the
VAT paid & received from Bills/Invoices correctly. The Input VAT account has
negative values, and output VAT has positive values. We are supposed to pay the
difference of these.
For example:
VAT paid to Vendor
(50.00)
VAT received from Customer 75.00
FINAL VAT PAYABLE TO GOVT 25.00
Keeping the above example, I would like to pass one entry, and pay off the
difference amount.
Example:
DR Final Payable to Govt
CR Bank
But, how can I pass the Debit entry? Should I create a 'Tax' placeholder account
and pass it to that? But then the individual Input & Output VAT accounts might
have a balance.
Please advise.
I am not SURE about your description of the accounts, but let's say that
under liabilities you have an account VAT and under it children "VAT
paid" and "VAT received" << set up that way, the amount shown for the
parent will be the net >>
Are you asking what the transaction would look like when you paid the
net amount to the government? Worried (correctly) that if you did that
by debiting the parent (correctly bring the net to zero) it still leaves
balances in the children?
What makes you think that a transaction has just one debit and one
credit? Have you not yet entered any "split" transactions? Try doing
that. The transactions would debit "VAT received", and credit "checking"
and "VAT paid" << the amount of the credit to checking would be the
amount of the net >>
Michael D Novack
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