Trading stock represents inventory still on hand at

This preview shows page 10 - 12 out of 75 pages.

Trading stock represents inventory still on hand at the end of April 2020 (opening stock 1 May 2020)with a cost of R5 000 (excluding VAT), which exceeded the market value. Purchases for the period1 May 2020 to 30 June 2020 amounted to R78 200. Trading stock with a cost of R4 000 (excludingVAT) and an open-market value of R4 370 remained on hand at 30 June 2020 (closing stock30 June 2020).Also refer to note 7 for creditors.6.The following is the debtors age analysis on the local credit sales of trading stock:30 days60 days90 daysTotalAmount (R)nil8 7405 06013 800Des Ion is of the opinion that the 90 days outstanding debtors amount of R5 060 will not berecoverable and consequently wrote it off on 30 June 2020. BrandMe does not charge any intereston outstanding accounts.Note: the foreign debtor (see note 9) is not included in the debtors age analysis.7.The following is the creditors age analysis:30 daysTotalAmount (R)18 00018 000
11TAX4861/108/2020NTA4861/108/2020QUESTION 2 (continued)The 30 days creditors of R18 000 relate to the following goods and services purchased:oR2 300trading stock, which is still on hand at 30 June 2020; andoR15 700trading stock, which has already been sold8.Local cash sales for the period 1 May 2020 to 30 June 2020 amounted to R368 000. No saleswere made on credit during this period.9.On 1 April 2020 BrandMe had exported a shipment of branded gifts to a client in Botswana (not aconnected person) for 10 000 Pula (BWP). The items were shipped free-on-board on 1 April 2020and the client paid in full on 1 June 2020.DateSpot rate1 April 2020BWP 1 = R1,201 May 2020BWP 1 = R1,251 June 2020BWP 1 = R1,3030 June 2020BWP 1 = R1,3531 December 2020BWP 1 = R1,40Assume that the sale was taken into account in the taxable income up until 30 April 2020.10.Office furniture is leased from Worx Furniture (Pty) Ltd for a monthly rental of R3 450 on a month-to month basis, requiring a one-month cancelation period. Binding General Ruling No. 7 providesfor a write-off period of six (6) years on furniture.11.Des Ion’s friend (a non-vendor) donated a coffee capsule machine, with a market value of R2 300(excluding VAT), on 1 June 2020 to BrandMe for use by the staff and for client meetings. BindingGeneral Ruling No. 7 provides for a write-off period of two (2) years on coffee machines. BrandMespends R650 a month on coffee capsules for the coffee machine.12.Salaries and wages amounted to R198 000 for the period 1 May 2020 to 30 June 2020. AsBrandMe was preparing to scale back operations, one employee (Jeff) was retrenched effective30 June 2020 and paid an additional lump sum of R27 000 in cash on 30 June 2020.PART B(7 marks)Sinbad Sails is a share dealer and a South African resident. Sinbad had developed and trademarked atrading algorithm in the 2018 year of assessment as his proprietary intellectual property. He uses thestock trading algorithm to assist him in his trading activities. Sinbad took out a loan of R100 000, fromXtraCash Ltd, a financial services institution, on 1 September 2019. He used R30 000 of the loan torenew the trademark licence for the stock trading algorithm and the remaining R70 000 to pay his tax

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 75 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
NoProfessor
Tags
1966, 1979, 1973, 1970

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture