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How to correct VAT Error

This topic has 3 replies, 2 voices, and was last updated 6 years ago by John Moffat.

Viewing 4 posts - 1 through 4 (of 4 total)

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June 19, 2018 at 6:49 pm #459413
sunny20
Member
- Topics: 33
- Replies: 30
Hi John,
Sales VAT rate has been wrongly entered as 20%, it should have been zero rated. Can you let me know if it can be corrected by Journal. If it’s possible how to remove the 20% VAT, and change to zero rated.
Many thanks
June 20, 2018 at 8:05 am #459440
John Moffat
Keymaster
- Topics: 57
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When the sale was made, the total (including VAT) will have been debited to the receivables account, and the VAT will have been credited to the VAT account.
Given it should have been zero-rated, the VAT needs removing, and therefore the entry will be to credit receivables account and debit the VAT account, with the amount of the VAT.
June 20, 2018 at 2:39 pm #459471
sunny20
Member
- Topics: 33
- Replies: 30
Sorry John I forgot mention cash sales. If it’s cash sales what is the Journal for the correction?
Many thanks
June 20, 2018 at 5:23 pm #459494
John Moffat
Keymaster
- Topics: 57
- Replies: 54500
In that case you would refund the cash to the customer in which case you would credit cash instead of crediting receivables.
However I really cannot see this as being relevant for the exam 🙂
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