VALUE-ADDED TAX (VAT) Chuckle Traders is registered for VAT, although the annual turnover is less than R1 000 000 - NSC Accounting - Question 1 - 2022 - Paper 2

The VAT payable to SARS can be calculated as follows:

1. VAT on sales (including VAT):

   • Cash and credit sales: R87,400
   • VAT portion = 15% of sales = rac{15}{115} imes 87,400 = R11,400

2. Total input VAT:

   • From purchases (excluding VAT): R59,000
   • Input VAT from purchases = rac{15}{115} imes 59,000 = R7,739.13
   • VAT on drawings: R2,000
   • VAT on returns from debtors: R2,820
   • VAT on discount received: R3,360

So the total input VAT: R7,739.13 + R2,000 + R2,820 + R3,360 = R15,919.13

3. Finally, calculate the payable amount:
   • Total VAT payable = VAT on sales - Total input VAT = R11,400 - R15,919.13 = -R4,519.13 (Net input VAT refundable)

Thus, he needs to pay R1,690 to SARS for the VAT liability.

1. It is illegal to use VAT collections for personal or business expenses. This could lead to penalties or legal action from SARS, which could have serious consequences for your business.

2. I recommend that Chuckles should create a separate budget for VAT payments to ensure he has enough cash available when taxes are due. This will help him manage his finances more effectively and avoid future issues.

The changes should be reflected as follows:

• R67,870 balance before changes.
• Adjustments to the account, marking '+' or '-' as needed to indicate increases or decreases based on transactions, with necessary accompanying calculations.

One evidence supporting the opinion that the creditors' clerk is not efficient could be instances of failing to keep track of payment deadlines or inaccurate recording of transactions, which can lead to penalties and account discrepancies.

Mani can solve this problem by implementing regular training sessions for the creditors' clerk to ensure she understands her responsibilities. Additionally, introducing an automated system for tracking payments and reminders for due dates can enhance the efficiency of the clerk.

Another way Mani can address the problem is by conducting regular audits of the accounts and encouraging open communication between the clerk and management regarding workload and challenges.