Vat Journal Entries

VAT Journal Entries

There is much confusion about the VAT journal entries. I have written down this article to clear the understanding about VAT entries, which will help in making ledger account accurately.

• When Goods are bought and you have to pay both purchase value and VAT input or pay both, following entry will be passed:
  

Purchase A/C .Dr (Value of purchase)

VAT A/C .Dr (VAT on purchase)

To Cash/Bank/Creditor A/C (Value of purchase + VAT input

• When Goods are sold and you have to receive both sales value and VAT Output or both, following journal entries will be passed:
  

Cash/Bank/Name of Customer s A/C Dr.(Value of purchase+VAT)

To Sales A/C (Value of Sales)

To VAT Output A/C (VAT on Sale)

• When we pay the NET VAT(Payable), following journal entry will be passed:
  

Net VAT Payable A/C .Dr (Excess of VAT output over VA

To Bank A/C