Please help!

xHolmesyx

Hi All,

I'm currently revising for my exam tomorrow by going through practise papers but for some reason I can't get my head around a certain VAT Return question, any help will be greatly appreciated. Please find attached the narrative in part 1 and the question in part 2.

The answer is adding £1,040 to the current amount of VAT due on sales which is £28,558.23. However, I can't understand why this is the correct answer as surely you would have to deduct £1,040 from the figure in the sales account as this has the VAT amount in when it shouldn't have and then multiply that amount by 20% to get the correct VAT amount? which gives you an answer of £27,310.23.

Any help will be greatly appreciated!

Cheers,

Chris

xHolmesyx

Thanks Mick. I hope questions like this won't catch me out in the test!