Hi I hope someone might be able to help me with an issue I have on Sage (I'm using Instants 2012).
I was advised by Sage to use the manual adjustments to the VAT return as a way of introducing the VAT on commission (as a tenant pays rent at the full amount which goes into the bank account, but from the bank, a landlord is paid the rent less a % commission and the % commission has a vat element).
Having done the manual adjustment, and used the VAT wizard to clear down, I am now left with a Debit balance on 2204 Vat manual adjustments which then appears on the balance sheet. I'll have to do this every VAT return so the balance on 2204 would increase indefinitely year on year. Should I be doing some sort of adjustment journal to clear it off once that Vat has been paid? I do the usual vat transfer and clear down but obviously that doesn't affect the 2204 manual adjustment.
Also, they have just paid corporation tax relating to the previous year, and no accrual was made for it (as I was given no details of this when I took over at the beginnign of the year so didn't load any provision into my openign balances on sage)
Would the best way forwards be to do a journal from the opening reserves figure to create a provision in 2320 Corporation Tax and I can then reverse the accrual when the payment is made?
I'd really appreciate any advise anyone has. I always know exactly what to do before I switched to Sage! Many thanks
This may be a problem to do with T9 entries not appearing on the VAT Return; this is a default Sage setting which can be changed. This would help future transactions. Historically, you would need to create a Journal which is T9 on one side and, say, T1 on the other, to get Sage to include it in the Return as well as the Control Account.
Yes you need to post a journal once you reconcile the VAT. Although here you are manually posting it, these nominals needs to be cleared every time you reconcile VAT.
Let me give you an heads up here. Lets say your actual VAT liability of £150 which includes £50 of your maunal adjustments to nominal 2204. Now when you look at the balance sheet, under current liabilities, it must be showing as VAT liabilitt £100 and VAT manual adjustments £50. Which is correct.
In order to clear the balances on your 2204 account, post the journal below every time you reconcile the VAT.
DR CR
2204 X
2202 X
Now you can see that 2204 account is cleared and in the balance you can see £150 of VAT liability.
Corporation Tax:
I would leave it where it is now. While preparing year end accounts this would be taken care of their accountants.
However, saying that have you posted any year end journals once the last year statutory accounts has been finalised. If yes, then there should be a balance for CT. If no, then i would suggest not to play with it,let the accountants post the year end journals and reconcile it.
