VAT sent too Inland Revenue

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:24AM in AAT student discussion
Hi

If i was sending the inland revenue a chq for £48125 for VAT for last quarter, what will the double enrty be?

account name DR CR
???? ???
???

Thanks very much

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT sent too Inland Revenue

    Well, by paying the HMRC you're reducing the amount you owe them by reducing the money you have in your bank account.

    This means you are reducing the liability of VAT, and the asset of Bank. Since to reduce an asset you must credit the account, and to reduce a liability you must debit the account, the double entry must be:

    Dr VAT £48125
    Cr Bank £48125
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT sent too Inland Revenue

    great, thanks very much

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