Help with cash book VAT

Hi All,

The question is: you receive a cash receipt for £326 cash and a £1000 cheque. How do i work out the VAT for this??

Any help would be appreciated.

Thanks

Chris

Comments

  • Clintm15
    Clintm15 Well-Known FarehamRegistered Posts: 247
    Well, assuming that VAT is calculated on a cash basis and both the payment and receipt relate to vatable items...

    VAT output = £65.20 (£326 x 20%)
    VAT input = £200 (£1000 x 20%)

    VAT recoverable = £134.80 (£200 - £65.20)
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  • Chrisb76
    Chrisb76 Registered Posts: 7
    Looking at the sample cbt answer sheet the answer is £221. It's on the debit side of the book. Cash column is 326, bank column is 1000, VAT is 221 and cash sales column is 1105. I'm just not sure how the 221 is worked out.
  • TreadStone
    TreadStone Feels At Home AAT Licensed Accountant Posts: 280
    It's the output VAT on £1326..........
  • Chrisb76
    Chrisb76 Registered Posts: 7
    Yep cheers ive just realized what i did wrong lol
  • Clintm15
    Clintm15 Well-Known FarehamRegistered Posts: 247
    Chrisb76 said:

    Yep cheers ive just realized what i did wrong lol

    You didn't write the question out too clearly in your first post.

    It's the output VAT on £1326..........

    It's not. The VAT output is on the £1105 sales. £1105 x 20% = £221.
    AAT
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  • TreadStone
    TreadStone Feels At Home AAT Licensed Accountant Posts: 280
    Which is the output on £1326 is it not ?

    For the pedantic, maybe I should have said inclusive. Depends on how you read it.
  • Neillaw
    Neillaw New Member RossendaleMAAT, AAT Licensed Accountant Posts: 283
    Can't we just divide the total by 6.
  • TreadStone
    TreadStone Feels At Home AAT Licensed Accountant Posts: 280
    Does it really matter ?

    The OP was happy enough upon realising her error.
  • Clintm15
    Clintm15 Well-Known FarehamRegistered Posts: 247
    Neillaw said:

    Can't we just divide the total by 6.

    You can, but that won't teach you how to calculate VAT if the rate changes.

    If you use 0.2/1.2 x £1326 = £221, you will be better served in the long run.

    So if the rate changed to 15% you would just adjust accordingly.

    For example,

    0.15/1.15 x £115 = £15.
    AAT
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  • Clintm15
    Clintm15 Well-Known FarehamRegistered Posts: 247

    Which is the output on £1326 is it not ?

    For the pedantic, maybe I should have said inclusive. Depends on how you read it.

    Sure, I'm just highlighting for OP that the VAT is charged on the sales. Didn't mean it to sound so dismissive.
    AAT
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    F8 - Audit & Assurance - Dec 2015 (passed)
    F9 - Financial Management - Jun 2015 (passed)
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