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VALUE-ADDED TAX (VAT) Hilda Groceries is registered for VAT - NSC Accounting - Question 1 - 2021 - Paper 2
Question 1
VALUE-ADDED TAX (VAT) Hilda Groceries is registered for VAT. The standard VAT rate is 15% and is applied on most products. REQUIRED: 1.1.1 Implementation of VAT: ... show full transcript
Worked Solution & Example Answer:VALUE-ADDED TAX (VAT) Hilda Groceries is registered for VAT - NSC Accounting - Question 1 - 2021 - Paper 2
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Calculate the amount payable to SARS in respect of VAT for the two months ended 30 April 2021.
Answer
To calculate the VAT payable to SARS, we first determine the output VAT and input VAT:
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Output VAT from sales:
- Total sales: R 412,000
- VAT on sales = $412,000 imes 0.15 = R 61,800
- Total including VAT = R 412,000 + R 61,800 = R 473,800
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Input VAT from purchases:
- Purchases of trading stock: R 230,000
- VAT on purchases = $230,000 imes 0.15 = R 34,500
- Total including VAT on purchases = R 230,000 + R 34,500 = R 263,800
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Total Input VAT (considering all transactions):
- Discount allowed: R 0 (not applicable)
- Goods returned: R 19,320 (VAT portion calculated at 15%) = $19,320 imes 0.15 = R 2,898
- Bad debts recovered: R 140 (VAT portion = $140 imes 0.15 = R 21)
- Owner's transfer: R 1,380 (VAT portion = $1,380 imes 0.15 = R 207)
- Total Input VAT = R 34,500 + R 2,898 + R 21 + R 207 = R 37,626
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VAT Payable calculation:
- Starting balance on 1 April 2021: R 9,450
- Total Output VAT: R 61,800
- Total Input VAT: R 37,626
- VAT Payable = (R 61,800 - R 37,626) + R 9,450 = R 33,624.