FAC
exam pack from 2015 to 2017.pdf

Some transactions are exempt of vat such as the sale

Info icon This preview shows pages 79–82. Sign up to view the full content.

Some transactions are exempt of VAT, such as the sale of non-current assets for which VAT is not claimable upon purchase such as motor vehicles, salaries and wages, petrol, e.t.c. Bravo Traders CASH RECEIPTS JOURNAL DATE DOC. NO DETAILS ANALYSI S OF RECEIPT S BANK SALE S DEBTO RS CONTR OL SETTLEM ENT DISCOUN T GRANTE D VAT INPUT VAT OUTP UT SUNDRY ACCOUNTS 2010 Mar 1 CRR Cash sales 684 600 1 84 1 776 B. Bord 650 707 2 50 2 (7) 2 777 B.Bravo 25 000 26 334 6 25 000 Capital 7 CRR Cash Sales 2 850 2 850 2 500 3 350 3 14 778 Prince Garage 5 500 4 5 500 Motor vehicle Disposal CRR Cash sales 7 068 12 568 7 6 200 5 868 5 41 752 9300 707 50 (7) 1302 30 500 1 . Cash Sales R684 VAT = 14/114X R684 = R84 Sales = R684- R84 = R600 58 | P a g e
Image of page 79

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

FAC1502 2014 2 Account balance = R707 Amount received = R650 Settlement discount granted = R 57 VAT =14/114xR57= R7 (VAT Input) Actual settlement discount granted = R50 The VAT on settlement discount granted is transferred to VAT Input account to reduce the amount owed to SARS. When we sold the goods, we had created VAT output from the sale which indicates that we owe SARS but now we are no longer going to receive the VAT component on discount, so we should reduce the amount owed to SARS. This is done by entering in amount owed to SARS. This is done by entering in VAT input. The total amount due, is entered in the debtors column, since this represents the total debt settled. 3 Cash Sales R2 850 VAT = 14/114X R2 850 = R350 Sales = R2 850- R350 = R2 500 4 There is no VAT on the sale of vehicles because in accordance to VAT laws, no VAT is claimable upon the purchase of vehicles. If VAT cannot be claimed when we purchase an item, therefore, VAT cannot be payable upon disposal. 5 Cash Sales R7 068 VAT = 14/114X R7 068 = R868 Sales = R7 068- R868 = R6 200 In the sales column, we enter the price exclusive of VAT, since this is the amount that belongs to the sales of the business. The VAT is entered in the VAT output whilst the total is entered in the bank column since the customer pays us the sum inclusive of VAT. 6 Banking (1March 2010) = R684+R650+R25 000 = R26 634 7 Banking (14 March 2010) = R5 500+ R7 068 = R12 568 CASH PAYMENTS JOURNAL This is the book of original entry in which we record all payments made. The payments are entered inclusive of VAT in the bank column and the VAT component is entered in the VAT input column as this represents an amount we should claim from SARS. VAT is charged when the business are charged for goods or services, as such, no VAT will be accounted for when settling a creditor except for a component of settlement discount received, if any, as the VAT component on settlement discount should be reversed to VAT output. This is because, this is a claim we had initially recorded but we can no longer claim it since we will no longer pay it to the supplier. 59 | P a g e
Image of page 80
FAC1502 2014 CASH PAYMENTS JOURNAL DATE DOC. NO. DETAILS BANK PURCHA SES CREDITORS CONTROL SETTLEMEN T DISCOUNT RECEIVED VAT INPUT VAT OUTPU T SUNDRY ACCOUNTS Amount Details 5 543 Dron traders 1026 1 126 1 900 1 stationery 12 544 Dennis cc highway 3200 3542 2 300 2 (42) 2 22 545 Garage 570 570 fuel 28 546 Kandas stores 1368 3 1000 3 140 3 28 4 200 4 Electric fan 6164 1000 4112 322 297 (42) R 1 Total stationery = 1 026 VAT (14/114xR1026) = 126 Stationery = 900
Image of page 81

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 82
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern