Using Sage. If a sole trader has paid VAT from his personal account instead of the company bank account should his drawings account be credited or should his capital account be credited. It just at at the year end his drawings account will show a credit balance. The VAT liability related to the period 2008 to 2010. The Final Accounts as at 31.03.10 were showing the VAT liability. The company year end runs from April-March and the liability was paid in July 2011.
You are likely to have code 3000, as Capital. You have probably got another one for Drawings, and possibly another for Capital introduced.
If you have one for Capital introduced I would use that one, or create one if not (my preference to have seperate Cap introduced and drawings accounts)
CR the Capital Introduced a/c
DR VAT Liability a/c
I would not adjust the Capital account until year end but if you do use the Drawings a/c instead of a Capital Introduced a/c, it is possible that the net result of payments and receipts could leave credit balance.
At the end of the day the result is the same
HTH
Bill
EDIT: Beat me to it David. My preference for not touching the Capital account is only for my own clarity
-- Edited by Wella on Tuesday 6th of December 2011 12:03:25 PM
