I've just completed the VAT return for my boss but ohhhh I'm going to be in some trouble I think? I put everything onto sage and reconciled the bank and after the VAT was done I realised that I had not dealt with three months of contra invoices (forgetting that the company was cash accounting for VAT) so I guess these will have to be accounted for in the next VAT quarter.
So can anyone explain to me how to handle contra invoices when the client is VAT cash accounting? I am using sage line 50, or simply what the double entries should be? so confused with this.
Oh and just to let you all know I'm from the West Midlands, where the sun is shining at this precise moment, lovely evening:)
In order to trigger the VAT element of both the sales and purchase ledger sides of the contra I would enter the full receipt and the full payment as if they were settled individually. The net result would be what actually shows on your bank statement. (I would mark as 'contra' in the detail somewhere.)
You could do the same with the omitted amounts left on the ledgers from your last return and sweep them up in the 'include previous unreconciled' when you do your next one. The net result of doing this in the bank would be zero.
Hope that helps.
(It's been tipping down here in East Surrey on and off all day; now that we (I say 'we'; some of us aren't, clearly. :-/) are inside, glued to the football, it's positively tropical outside.)
If this is a regular occurance, what I have done in the past is create a new bank account, called Contra Account, and use it like an ordinary bank account except use only for contra supplier/ customer transactions.
If you have access to Ask Sage, article 13687 gives a bit more detail.
