Remember when answering that the business is an internet retailer and holds absolutely no stock...
So, here are some scenarios with some questions that I'd like to get some crystal clear answers for! If I can make the scenarios any clearer, please let me know, but I suspect I'm already stretched well beyond the extent of my accounting knowledge here.
1. User A buys a gift voucher, and User B buys a chair using it.
Q1. Was the initial gift voucher purchase subject to VAT? If not, why not? Q2. What should we be recording against that chair sale? Right now, a gift voucher would look like any other money source (e.g. like a credit card)
2. User A buys a gift voucher, and User B buys a lemon squeezer from us using it.
Q3. Was the initial gift voucher purchase subject to VAT? If not, why not? Q4. Was the purchase of a lemon squeezer subject to VAT? If not, why not? Q5. What should we be recording against the sale of the lemon squeezer?
3. User A buys a gift voucher, and User B buys a chair and a lemon squeezer from us using it.
Q6. Was the initial gift voucher purchase subject to VAT? If not, why not? Q7. In the subsequent purchase, what value of the sale is subject to VAT? Q8. On which elements of the subsequent purchase is VAT due? How should this be recorded?
4. User A buys a gift voucher and a lemon squeezer from us. User B purchases a lemon squeezer from us using the gift voucher.
Q9. The initial purchase must be subject to some VAT. What is the effective VAT rate here? Q10. Does the VAT collected on the initial purchase have any bearing on the later purchase? Q11. Assuming the initial purchase takes place at a composite VAT rate, how does this scenario in general affect the answers to questions 1, 2, 3, 4, 5, 6, 7 and 8? Q12. If both the initial purchase and the later purchase have some kind of composite rate, how on earth can we / should we record this?
5. (In general)
Q13. We have potential voucher sales funding later product sales. What do we need to record in the two transactions to be able to reconcile everything effectively?
