Hello Mariana,
From the exercise, you know that: The company supports VAT on direct materials purchases at a rate of 23% and charges VAT on sales at the same rate. The difference between VAT charged to customers and VAT paid to suppliers in February and March amounts to 2 226.4 € and 1 357 €, respectivelyThese amounts should be paid to State according to the payment terms of 2 months.
This means that, in April you will pay the difference in VAT from February (2 months before); in May you pay the difference in VAT from March and, in June, you pay the VAT difference from April. Thus, when computing the cash budget, you already registered the paymenys you made to the state regarding VAT from Feb and March (2226€ and1357€) and, in june, you also registered the payment to the state of the VAT from April (you need to cmpute the difference between VAT charged on sales and VAT paid to suppliers to compute this ammount).
Then, in the balance sheet, you must recognize the VAT payable — that is, the VAT for the respective period that has not yet been paid, since the payment term is two months (that's why this represents a liability).As shown in your cash budget and the explanation above, the VAT that remains unpaid refers to the months of May and June. Therefore, you need to calculate the difference between the VAT charged on sales and the VAT paid on purchases for those two months, and record it as "VAT Payable" on the balance sheet.
From the exercise, you know that: The company supports VAT on direct materials purchases at a rate of 23% and charges VAT on sales at the same rate. The difference between VAT charged to customers and VAT paid to suppliers in February and March amounts to 2 226.4 € and 1 357 €, respectivelyThese amounts should be paid to State according to the payment terms of 2 months.
This means that, in April you will pay the difference in VAT from February (2 months before); in May you pay the difference in VAT from March and, in June, you pay the VAT difference from April. Thus, when computing the cash budget, you already registered the paymenys you made to the state regarding VAT from Feb and March (2226€ and1357€) and, in june, you also registered the payment to the state of the VAT from April (you need to cmpute the difference between VAT charged on sales and VAT paid to suppliers to compute this ammount).
Then, in the balance sheet, you must recognize the VAT payable — that is, the VAT for the respective period that has not yet been paid, since the payment term is two months (that's why this represents a liability).As shown in your cash budget and the explanation above, the VAT that remains unpaid refers to the months of May and June. Therefore, you need to calculate the difference between the VAT charged on sales and the VAT paid on purchases for those two months, and record it as "VAT Payable" on the balance sheet.
For example for May: VAT (charged) - VAT (paid) = 21024 (sales) * 23% - 3825€ (purchases) * 23% = 3955.77€.
Hope it was clear!
Madalena Paiva
Hope it was clear!
Madalena Paiva