JOURNAL

HettyVerney

I have a new client who has realised the sales figure he has used for the past year is incorrect due to working it out from his bank statements, it was actually a figure less their transaction fees. We’ve worked out the difference but need to know what journals we need. We have increased sales, transaction fees, VAT and he’s on flat rate 8.5%. My brain is addled, can anyone help please?

MarieNoelle

I would enter a journal as follows - assuming £600 of transactions fees
DR: Transactions fees £600
CR: VAT £100
CR: Net Sales £500

And then depending on how you account for the flat rate income I would do
DR: VAT £49
CR: other income (FRS income) £49

FRS income being £500 *20% less £600 x 8.5%