VAT PAID ON PURCHASES - 100000 VAT COLLECTED ON SALES - 200000 VAT BROUGHT FORWARD - 50000 (OPENING VAT)
I PASSED THE ENTRY IN TALLY
1) VAT TAX A/C DR 100000 MVAT O/S A/C 100000
2) MVAT O/S A/C DR 50000 VAT B/F 50000
THEREFORE NET VAT LIABILITY SHOWN UNDER THE HEAD CURRENT LIABILTY IS RS 50000 AND VAT TAX IS SHOWN UNDER THE HEAD DIRECT EXP IN TRADING ACCOUNT RS 100000/-.
I WANT TO KNOW WHETHER THE ABOVE TREATMENT IS CORRECT OR WRONG? FURTHER IF IT IS WRONG PLZ SUGESST A CORRECT TREATMENT.
Purchase A/c Dr xxx Vat Input Credit A/c Dr 100000 To vendor A.c Cr xxx+100000 (for purchase of goods)
2.When you sell the goods entry should be Customer A/c Dr xxx To Sales A/c Dr xxx To Vat Payable A/c 200000 (for sales of goods)
3.For input credit b/f:
no entry already lying in vat input credit A/c ....just show it in opening of this A/c i.e. all balances of trail balance goes in there relevant accounts.
when you pay tax than adjust your input lying with you including b/f input, entry should be:
Vat Payable A/c Dr 200000 To Vat Input Credit A/c Cr 150000 To cash/bank A/c Cr 50000 (for tax paid after adjusting input credit)
The above set of treatment is followed in all MNCs.
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