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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 VAT Amount for Total Sales

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Answer

For total sales of R544,500, the VAT amount can be calculated as follows:

VAT = ext{Total sales} imes rac{15}{115} = 544,500 imes rac{15}{115} = R81,675

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

Step 2

Calculate VAT Amount for Purchases of Stock

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Answer

For purchases of stock totalling R32,000, the VAT amount is:

VAT = ext{Purchases} imes rac{15}{115} = 32,000 imes rac{15}{115} = R4,800

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

Step 3

Calculate VAT Amount for Drawings of Stock

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Answer

For drawings of stock amounting to R7,200, the VAT amount is:

VAT = ext{Drawings} imes rac{15}{115} = 7,200 imes rac{15}{115} = R1,080

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

Step 4

Calculate VAT Amount for Bad Debts

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Answer

For bad debts of R6,500, the VAT amount is calculated as:

VAT = ext{Bad debts} imes rac{15}{115} = 6,500 imes rac{15}{115} = R 915

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

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