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Double Entry for Trial Balance

Hi all,

I was wondering if anyone could help me with preparing the double-entry for trial balance. I understand the basics, but as soon as VAT is involved and credit notes are issued as well (for example), I get confused.

For example:
Sales on credit by Browns & Son £5,500 + VAT: what would your entries be within the general ledger? If it's a sale on credit am I right in thinking that you Debit Sales Ledger Control by the full amount of £6600, then Credit VAT account by £1100 and Cr Sales by £5500 or is this incorrect?

Also, what would entries be for 'Payment made by cheque for £3,000 + VAT, sent to credit supplier. I know that the VAT is £600, so am I right in saying Credit Purchase Ledger Control by £3,600, Debit VAT by £600 and Debit Purchases by £3,000?

Thanks for your help in advance! :)
AAT Level 3 :)


  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456

    1st example your journal is correct, 2
  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456
    Oops :)

    2nd journal would be Dr Purchase Ledger Control £ 3,600 Cr Bank £ 3,600 - the reason for this is that the VAT and Purchases expense have already been accounted for as the Invoice was entered into the Purchases Day Book.

    So for credit supplies the journals would be: -

    Dr Purchases
    Dr VAT
    Cr Purchases Ledger Control

    Being Posting the Suppler Invoice, then....

    Dr Purchase Ledger Control
    Cr Bank

    On paying the Invoice

  • RosieCarlisleRosieCarlisle Greater ManchesterRegistered Posts: 60
    Indeedy - you only enter VAT and purchases/sales in the general ledger when the invoice is initially entered into the ledgers. You wouldn't enter VAT and purchases/sales in general ledger when someone is paying off an existing invoice, because you'd end up duplicating the entries.
  • amy256amy256 Registered Posts: 32
    Thanks guys!
    AAT Level 3 :)
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