# Help with cash book VAT

Registered Posts: 7
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

• 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)
AAT
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• 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.
• Feels At Home AAT Licensed Accountant Posts: 280
It's the output VAT on £1326..........
• Registered Posts: 7
Yep cheers ive just realized what i did wrong lol
• 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
Level 2 - 2011
Level 3 - 2012
Level 4 - 2013

ACCA
F4 - Corporate Law - Dec 2015 (passed)
F5 - Performance Management - Dec 2014 (passed)
F6 - Taxation - Dec 2013 (passed)
F7 - Financial Reporting - Jun 2014 (passed)
F8 - Audit & Assurance - Dec 2015 (passed)
F9 - Financial Management - Jun 2015 (passed)
• 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.
• New Member RossendaleMAAT, AAT Licensed Accountant Posts: 283
Can't we just divide the total by 6.
• Feels At Home AAT Licensed Accountant Posts: 280
Does it really matter ?

The OP was happy enough upon realising her error.
• 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
Level 2 - 2011
Level 3 - 2012
Level 4 - 2013

ACCA
F4 - Corporate Law - Dec 2015 (passed)
F5 - Performance Management - Dec 2014 (passed)
F6 - Taxation - Dec 2013 (passed)
F7 - Financial Reporting - Jun 2014 (passed)
F8 - Audit & Assurance - Dec 2015 (passed)
F9 - Financial Management - Jun 2015 (passed)
• 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
Level 2 - 2011
Level 3 - 2012
Level 4 - 2013

ACCA
F4 - Corporate Law - Dec 2015 (passed)
F5 - Performance Management - Dec 2014 (passed)
F6 - Taxation - Dec 2013 (passed)
F7 - Financial Reporting - Jun 2014 (passed)
F8 - Audit & Assurance - Dec 2015 (passed)
F9 - Financial Management - Jun 2015 (passed)