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HELP please - VAT Control Account

Hello,

Can anyone help me please?

So I came across these two double entries, as follows:

1) credit sales
sales ledger control DR 24,000
VAT CR 4,000
Sales CR 20,000

Q: Why do we debit the sales ledger CONTROL account and not just the sales ledger account? And if we do this shouldn't we also credit the VAT control account in this particular journal entry as well?


2) credit purchases
purchases DR 10,000
VAT DR 2,000
purchases ledger control CR 12,000

Q: Why do we credit the purchases ledger CONTROL account and not just the purchase ledger account?

Thank you kindly :s

Comments

  • MindTheGAAPMindTheGAAP Registered Posts: 17
    Why do we debit the sales ledger CONTROL account and not just the sales ledger account?
    You may find this thread useful regarding the Sales Ledger and the Sales Ledger Control Account. In the journal you have mentioned, they are effectively the same thing. The same logic also applies to the Purchase Ledger and the Purchase Ledger Control Account.
    And if we do this shouldn't we also credit the VAT control account in this particular journal entry as well?
    "VAT CR 4,000" is crediting the VAT Control Account.



    MAAT AATQB
  • nongmattnongmatt Registered Posts: 4
    So, in theory, the above credit sales entry can be written as:
    Sales ledger DR 24,000
    VAT CR 4,000
    Sales CR 20,000

    and VAT account and VAT Control account is kind of the same account? In fact, there's no such thing as VAT account cause that's just unnecessary right?
  • MindTheGAAPMindTheGAAP Registered Posts: 17
    Exactly! Every time a transaction is recorded in the Sales Ledger (eg. a Sales Invoice, as in your example), an identical record is kept in the Sales Ledger Control Account on the General Ledger.

    I suspect "VAT Account" is just an abbreviation of "VAT Control Account".
    MAAT AATQB
    nongmatt
  • nongmattnongmatt Registered Posts: 4
    Thank you so much for your help :-)
    MindTheGAAP
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