Errors Limited made credit sales of £12,000 inclusive of VAT. The double entry to records these sales was Debit sales £10,000, Debit VAT £2,000, Credit trade receivables £12,000. What is the journal entry required to correct this error?

Question

Quizplus · Accepted Answer

The original entry was incorrect because it recorded the sales and VAT amounts separately instead of as a total. The correct entry should have been Debit trade receivables £24,000, Credit sales £20,000, and Credit VAT £4,000 to reflect the correct sales and VAT amounts.

Errors Limited Made Credit Sales of £12,000 Inclusive of VAT