Contractor and Subcontractor P&L entries - help

System

Can somebody clear my mind, please, it's in a spin?!

A partnership acts as both contractors and subcontractors.

An invoice issued by them for 'Labour and Materials' for let's say £470 (gross), £400 (net) and £70 (Vat) has at the bottom 'Labour content £100'.

My questions are:

1 What are the accounting entries for this?

2 Precisely how is the expense total for subcontracting labour arrived at?

Thanks very much for any help.

System

Re:Contractor and Subcontractor P&L entries - help

Is this work being done under CIS? If so, then I guess that the reason for specifying the labour content is that is the amount that will have CIS tax (18%) deducted. The contractor that they have invoiced will then pay:

Materials £300.00
Labour £82.00 (£100 - 18% CIS tax)
VAT £70.00

Total = £452.00

P&L entries

Dr debtors £470.00
Cr sales - materials £300.00
Cr sales - labour £100.00
Cr VAT £70.00

Labour could have been worked out in lots of different ways - per hour, fixed price for the job, best guess, think of a figure.....

Hope this helps you.
Claudia

System

Re:Contractor and Subcontractor P&L entries - help

Thanks, Claudia. Very helpful!