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Accounting for callcards - Phone Commission

  • 12-05-2010 4:02pm
    #1
    Scuteen
    Closed Accounts Posts: 2 ✭


    Hi,

    Does anyone know how a shop would account for callcards. This shop in particular purchases callcards from Musgraves. Should we be charged VAT on these purchases? Consequently, should we be charging VAT on Sales? Our sales will derive from 3% commission per callcard sold! Could anybody provide me with the journals to properly reflect these transactions ie sales, purchases, commission!! Your help would be greatly appreciated!! Thanks


Comments

  • #2
    Odats
    Registered Users, Registered Users 2 Posts: 767 ✭✭✭Odats


    Firstly do you pay for the callcards from Musgraves?
    Secondly do you only get paid the commission from Musgraves?
    It's all about the substance of the transaction and the risks and rewards of ownership.

    If you pay for the cards or are invoiced up front for the callcards
    You would account for them the same as you would any other shop item bought from the cash and carry.

    Dr: Purchases
    Dr: VAT Control A/C
    Cr: Creditors

    When you sell them
    Dr: Bank
    Cr: Sales
    Cr: VAT Control A/C

    If however Musgraves only give you the commission you only account when you sell them: (Similar to Consignment Stock)

    Dr: Purchases
    Cr: Sales
    The VAT on these will cancel each other out as these are the same amount i.e. the cost less commission.

    Dr: Bank
    Cr: Commission (Sales)
    Cr: VAT
    Commission AFAIK is 21% VAT

    If in doubt ring your local VAT office and one of the inspectors will get back to you on it.


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