Calculating vat on a credit note (invoice includes settlement discount)!

katie2008katie2008 Trusted RegularRegistered Posts: 294
So its complicated but i will try to explain quickly.

Im confused about the vat on a credit note, when settlement discount was included on the invoice.

say ABC suppliers returned 100 cans at 1.00 each and they had 5% settlement discount on the invoice.

The invoice would read

100 nett
16.62 (vat on 95.00)
116.62 gross.

if the goods were returned after payment had cleared, would the credit note be the same, or would vat have to be amended?

im confused, got my simulation for unit 1 on wed!

any help is appreciated. Thanks and good luck to all.

Comments

  • PixiePixie Settling In Nicely Registered Posts: 18
    As I understand it whenever a settlement discount is offered the VAT is always calculated on Net plus settlement discount - Thus a Credit note (including the VAT) is identical to the original invoice.
  • DiannewDiannew Font Of All Knowledge Registered Posts: 2,814
    Pixie wrote: »
    As I understand it whenever a settlement discount is offered the VAT is always calculated on Net plus settlement discount - Thus a Credit note (including the VAT) is identical to the original invoice.

    That is correct. The credit note has to be the same as the original Invoice, as that is the amount that would have been posted to the customers account in the ledger.
  • katie2008katie2008 Trusted Regular Registered Posts: 294
    thats that sorted, i had a thought not to change it but thought i better check anyway!

    thankyou both!

    Good luck in your courses!
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