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VAT The following relates to Lunga Stores for the VAT period ended 30 April 2020 - NSC Accounting - Question 2 - 2020

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VAT The following relates to Lunga Stores for the VAT period ended 30 April 2020. VAT at 15% applies to all goods. REQUIRED: Calculate the VAT amounts denoted by (i... show full transcript

Worked Solution & Example Answer:VAT The following relates to Lunga Stores for the VAT period ended 30 April 2020 - NSC Accounting - Question 2 - 2020

Step 1

Calculate the VAT amount for Total sales

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Answer

To calculate the VAT amount for Total Sales, apply the formula:

VAT ext{ }Amount = Total ext{ }Sales imes rac{15}{115}

Thus, VAT Amount = R544,500 imes rac{15}{115} = R81,675.

Effect: Increase in amount payable to SARS by R81,675.

Step 2

Calculate the VAT amount for Purchases of stock

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Answer

For the Purchases of Stock, the VAT is calculated as:

VAT ext{ }Amount = Purchases ext{ }of ext{ }Stock imes rac{15}{115}

Thus, VAT Amount = R200,173 imes rac{15}{115} = R30,027.

Effect: Increase in amount payable to SARS by R30,027.

Step 3

Calculate the VAT amount for Drawings of stock

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Answer

The VAT amount for Drawings of Stock is calculated using:

VAT ext{ }Amount = Drawings ext{ }of ext{ }Stock imes rac{15}{115}

Thus, VAT Amount = R32,000 imes rac{15}{115} = R4,800.

Effect: Increase in amount payable to SARS by R4,800.

Step 4

Calculate the VAT amount for Bad debts

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Answer

To calculate the VAT amount for Bad Debts, use:

VAT ext{ }Amount = Bad ext{ }Debts imes rac{15}{115}

Thus, VAT Amount = R7,015 imes rac{15}{115} = R1,035.

Effect: Decrease in amount payable to SARS by R1,035.

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