FRA unit 5

Emilie

Hello,

I was just wondering. i am doing a journal on an invoice and the company is registered for vat but the vat is not recoverable how ould you do the journal.

Example

motor vehicle 25,000
VAt 4,375
admin expenses 1,000

Total 30,375

how would i record this as a journal if you can not recover the vat. would the vat be put in the journal and the account.

I was thinking it would be this
Debit motor vehicle 25,000
debit admin expenses 1000
credit sundry ceditors 26,000.

Please help.

xx

mikes

although the vat is not recoverable, you will still need to pay it. so i would charge it to the vehicle account and credit, the creditors account.

Emilie

There is no specific crditors account. so would you post to the sundry creditors. please could you give an example of how the journal would be done.
Thanks,

mikes

Sure in this case it would appear as;

Debit Motor Vehicle 29375
Debit Admin Expenses 1000
Credit Sundary Creditors 30375

Emilie

so you would post the journal to the accounts not using the vat account. so put the vat in with the motor vehocle and post all to the motor vehicle account.