How to make accounting entries of VAT output tax
The amount of value-added tax that an enterprise collects from the buyer when selling goods is called output tax. How to write an accounting entry for the VAT output tax amount incurred?
Accounting entry of VAT output tax
Debit: accounts receivable/bank deposits, etc
Credit: main business income/other business income, etc
? ? ? Tax payable - VAT payable (output tax)
How to make input tax accounting entries?
Debit: goods in stock/raw materials/intangible assets/fixed assets, etc
Tax payable - VAT payable (input tax)
Credit: bank deposits/accounts payable, etc
Calculation formula of output tax
Output tax amount=sales amount excluding tax * applicable tax rate
Sales amount excluding tax=sales amount including tax/(1+VAT rate)
VAT related accounting
Small scale taxpayer
When purchasing materials:
Debit: raw materials, etc. (tax included, VAT included in the cost)
Credit: bank deposit, etc
When selling goods (services):
Debit: bank deposit, etc
Credit: main business income
? ? ? Taxes payable - VAT payable (no purchase and sales)
When paying VAT:
Debit: taxes payable - VAT payable
Credit: bank deposit
General taxpayer
Purchased goods:
Debit: goods in stock, etc
Tax payable - VAT payable (input tax)
Credit: bank deposit, etc
Goods sold:
Debit: accounts receivable, etc
Credit: main business income
? ? ? ? Tax payable - VAT payable (output tax)
VAT payable but unpaid in the current month:
Debit: taxes payable - VAT payable (transfer out unpaid VAT)
Credit: taxes payable - unpaid VAT
Unpaid VAT shall be paid in the following months:
Debit: taxes payable - unpaid VAT
Credit: bank deposit
Pay VAT of the current month:
Debit: taxes payable - VAT payable (taxes paid)
Credit: bank deposit