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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 ... 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

Total sales excluding VAT is R544 500. To find the VAT, use the formula:

extVATAmount=extTotalSalesimesextVATRate=R544ext500imes0.15=R81ext675 ext{VAT Amount} = ext{Total Sales} imes ext{VAT Rate} = R544 ext{ 500} imes 0.15 = R81 ext{ 675}

The effect is an increase in the amount payable to SARS.

Step 2

Calculate the VAT amount for Purchases of Stock

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Answer

Purchases of stock excluding VAT is R235 235. The VAT calculation is:

extVATAmount=R235ext235imes0.15=R34ext765 ext{VAT Amount} = R235 ext{ 235} imes 0.15 = R34 ext{ 765}

The effect is an increase in the amount payable to SARS.

Step 3

Calculate the VAT amount for Drawings of Stock

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Answer

Drawings of stock excluding VAT is R32 000. The VAT can be calculated as:

extVATAmount=R32ext000imes0.15=R4ext800 ext{VAT Amount} = R32 ext{ 000} imes 0.15 = R4 ext{ 800}

The effect is an increase in the amount payable to SARS.

Step 4

Calculate the VAT amount for Bad Debts

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Answer

Bad debts amount to R7 500 excluding VAT. Therefore, the VAT amount is:

extVATAmount=R7ext500imes0.15=R915 ext{VAT Amount} = R7 ext{ 500} imes 0.15 = R915

The effect is a decrease in the amount payable to SARS.

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