2.1 VAT Samson Traders is registered for VAT. The VAT rate is 15%. REQUIRED: 2.1.1 Calculate the figures indicated by (a) to (d) in the table below. 2.1.2 You are the internal auditor. The sole owner, Samson, used a business cheque to buy a new vehicle for R460 000 including VAT. This car is kept at home for his wife's use. Samson says the vehicle must be recorded as a business asset and R60 000 must be recorded as a VAT input in the business' books. Explain what you would say to Samson. Provide TWO points.

NSC Accounting Creditors’ reconciliation with the creditor’s statement: 2.1 VAT Samson Traders is regist

2.1 VAT Samson Traders is registered for VAT - NSC Accounting - Question 2 - 2018 - Paper 1

Question 2

2.1 VAT Samson Traders is registered for VAT. The VAT rate is 15%. REQUIRED: 2.1.1 Calculate the figures indicated by (a) to (d) in the table below. 2.1.2 You are... show full transcript

Worked Solution & Example Answer:2.1 VAT Samson Traders is registered for VAT - NSC Accounting - Question 2 - 2018 - Paper 1

Step 1

(a) 1 104 - 960

96%

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Answer

The calculation for (a) is performed by subtracting the sales returns from the sales figure. This yields:

$1 104 - 960 = 144$

Step 2

(b) 52 600 x 15%

99%

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Answer

For (b), we calculate the VAT on the purchases as follows:

$52 600 imes 0.15 = 7 890$

Step 3

(c) 720 x 100/15

96%

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Answer

The computation for (c) involves calculating the VAT input by utilizing the invoice amount and the rate:

$720 imes rac{100}{15} = 4 800$

Step 4

(d) (112 470 - 6 325) x 15/115

98%

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Answer

For (d), the calculation is done as follows:

First, subtract: $112 470 - 6 325 = 106 145$

Then, calculate the VAT: $106 145 imes rac{15}{115} = 13 845$

Step 5

Explain what you would say to Samson. Provide TWO points.

97%

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Answer

This situation can be considered tax evasion. Samson is attempting to reduce the VAT amount due to SARS. This action is both illegal and unethical. In doing so, he risks potential fines or imprisonment for engaging in criminal activity.
It is crucial for personal and business finances to be kept separate, in order to comply with business accounting principles. Samson should know that the full amount of R460 000 should not be recorded as a business expense. The vehicle’s value allocated for private use violates the accounting principles.

2.1 VAT Samson Traders is registered for VAT - NSC Accounting - Question 2 - 2018 - Paper 1

Worked Solution & Example Answer:2.1 VAT Samson Traders is registered for VAT - NSC Accounting - Question 2 - 2018 - Paper 1

(a) 1 104 - 960

(b) 52 600 x 15%

(c) 720 x 100/15

(d) (112 470 - 6 325) x 15/115

Explain what you would say to Samson. Provide TWO points.

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