# Module 5-2021- Question Bank and MEMO- VAT

```CACC011 -Module 5- VAT -Question Book AND Memo - 2021
UNIVERSITY OF LIMPOPO
TURFLOOP CAMPUS
SCHOOL OF ACCOUNTANCY
DEPARTMENT OF ACCOUNTING
CACC011
ACCOUNTING 1 - QUESTION BOOK
AND
MEME
MODULE 5 - VAT - All QUESTIONS
PAGES (19)
Prepared by: Mr TG MALEKA AND MR G NYIRENDA- (MAY 2021)
ACCOUNTANCY DREAM @ UL
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
1
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
CONTENTS
PAGE
QUESTION 1:
3-5
QUESTION 2:
6 - 16
QUESTION 3:
17 - 19
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
2
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
MODULE 5 - QUESTION 1.1
A) The following are the selling price of goods including 15% VAT. Calculate the VAT that is
included in each selling price:
o 1.1 - R 3.65
o 1.2 - R 14.90
o 1.3 - R 356.98
o 1.4 - R 3 980.00
o 1.5 - R 13 540.00
o 1.6 - R 4 560 000.00
B) The following are the selling price of products excluding 15% VAT. Calculate the selling
price inclusive of VAT:
o 1.1 - R 1.20
o 1.2 - R 18.50
o 1.3 - R 54.00
o 1.4 - R 168.00
o 1.5 - R 13 460.00
o 1.6 - R 210 530.00
C) The following are the selling price of products including 15% vat. calculate the selling
price exclusive of vat:
o 1.1 - R 12.80
o 1.2 - R 135.00
o 1.3 - R 2 030.00
o 1.4 - R 15 070.00
o 1.5 - R 135 694.00
o 1.6 - R 1 900 590.00
QUESTION 1.2
The following transactions took place in the books of IT Support. VAT is included at 15%, where applicable.
IT Support is a registered VAT vendor and so are all entities it is trading with.
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
1. Buy 3 new computers at R 6 583-00 each.
2. Purchase stationery on credit for R 574-00.
3. Received interest on fixed deposit – R 262-20.
4. Sell a computer for R 7 954-00.
5. Pay wages R 1890-00.
6. Paid the rent for premises by cheque – R 3 420-00.
7. Paid for staff entertainment – R 1 083-00.
8. Paid interest on bond – R 54 720-00.
9. Paid the rent for premises by cheque – R 3 420-00.
10. Render a repair service of R 783-00.
11. Buy a delivery vehicle and pay cash R 146 835-00.
12. Sell a printer for R 3 961-00.
13. Paid salaries – R 9 234-00.
14. Buy a passenger vehicle for business use amounting to R 171 000-00.
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
3
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
MODULE 5 - QUESTION 1.2 – Continued
 Required:
Identify
Account debited element &amp;
Amount
Amount
Input /
No
VAT
/ credited
financial
including VAT excluding VAT
Output VAT
statement
Asset; SoFP
1 Computer
R 19 749
R 17 173-04 R2 575-96
Input
◦ Calculate the value of the above transactions without VAT, using the following table:
QUESTION 1.1 – MEMO
A) 1.1 R3,65 X 15/115 =R0,48
1.2 R14,90 X15/115 = R1, 94
1.3 R356,98 X 15/115 = R46,56
1.4 R3 980X 15/115=R519,13
1.5 R13 540 X15/115= R1 766,09
1.6 R4 560 000 X 15/115 =R594 782, 61
B) 1.1 R1,20 X 115/100 = R1, 38
1.2 R18,50 X 115/100 = R21,28
1.3 R54 X 115/100 = R62,10
1.4 R168 X 115/100 = R193,20
1.5 R13 460 X 115/100 = R15 479
1.6 R210 530 X 115/100 = R242 109, 50
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
4
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
C) 1.1 R12,80 X 100/115 = R11,13
1.2 R13,50 X 100/115 = R11,74
1.3 R2 030 X 100/115 = R1 765, 22
1.4 R15 070 X 100/ 115 = R13 104, 35
1.5 R135 694 X 100 / 115 = R117 994, 78
1.6 R1 900 590 X 100/115 = R1 652 686, 96
QUESTION 1.2 – MEMO
TR.
NO
AMOUNT
AMOUNT INCL. VAT
EXCL. VAT
R6 583 R5 724,35
ACCOUNT DR / CR
1 INVENTORY
ELEMENT IN F/S
CA - SOFP
2 STATIONARY
INTEREST
4 REVENUE/SALES
5 SALARIES
6 RENT EXPENSE
7 INTERTAINMENT
8 INTEREST EXPENSE
9 RENT EXPENSE
SERVICES
10 RENDERED
11 VEHICLE @ COST
12 REVENUE/SALES
13 SALARIES
14 VEHICLE @ COST
EXP. SOPL
OTHER INCOME –
SOPL
REVENUE - SOPL
EXP - SOPL
EXP - SOPL
EXP - SOPL
EXP - SOPL
EXP - SOPL
R262,20
R7 954 R6 916,52
R1 890
R3 420 R2 973,91
R1 083
R54 740
R3 420 R2 973,91
REVENUE - SOPL
NCA -SOFP
REVENUE - SOPL
EXP - SOPL
NCA -SOFP
R783 680,87
R146 835 R127 682,61
R3 961 R3 444,35
R9 234
R171 000 R148 695,65
R574 R499,13
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
VAT - R
R858,65
INPUT /
OUTPUT
INPUT
R74,87
INPUT
R1 037,48
OUTPUT
R446,09
INPUT
R446,09
INPUT
R102,13
R19 152,39
R516,65
OUTPUT
INPUT
OUTPUT
R22 304,35
5
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
MODULE 5 - QUESTION 2
Baba Traders is a registered VAT vendor and so are all entities trading with it. VAT is levied at 15%. The
year-end of Baba Traders is 31 December. Baba Traders uses the perpetual inventory system.
The following balances appeared in the following general ledger accounts of Baba Traders on 31 July
2019:
Balances as at 31 July 2019
Debit – R
275 620.00
VAT account - (SARS)
3 680.00
Bank account
Credit - R
12 850.00
The following transactions occurred during August 2019:
1) Baba Traders ordered inventory on 1 August 2019 amounting to R 20 360-00 (including VAT). The
inventory was delivered on 5 August 2019 and was paid by EFT on the same day. The supplier
allowed a cash discount of 2,5%.
2) On 10 August 2019, Baba Traders delivered trade inventories that were sold on the same day for
cash. The invoice indicates the sale price as R 23 370 (including VAT). Baba Traders allowed a cash
discount of 2%. The cost of the trade inventories sold was R 8 200.
3) Baba Traders purchased a double cab bakkie on 15 August 2019 and paid R 370 500 (including
VAT) by cheque no 1357. The bakkie was delivered on the same day.
4) Baba Traders paid the rent for August 2019 on the first day of the month. The rent amounted to R
22 800 (including VAT).
5) Advertising costs amounting to R 13 110 (including VAT) were paid on 5 August 2019.
6) On 12 August 2019, Baba Traders also purchased a smaller single cab bakkie to be used for
deliveries. The cost of the bakkie is R 228 000 (including VAT) and will be paid to the supplier on
31 August 2019. The bakkie was delivered to Baba Traders on 12 August 2019.
7) Baba Traders also purchased machinery from a supplier on 14 August 2019. The cost of the
machinery amounted to R 456 000 (including VAT) and is to be paid in 10 equal instalments as
from 31 August 2019. The interest payable on the first instalment amounts to R 40 510.
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
6
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
MODULE 5 - QUESTION 2 - Continued
8) On 18 August 2019, Baba Traders purchased inventories on credit from Supplier Z, amounting to
R 85 500 (including VAT).
9) Baba Traders sold goods for cash amounting to R 285 000 (excluding VAT) on 20 August 2019. The
cost of sales amounted to R 100 000.
10) On 22 August 2019, customers returned some of the goods sold on 20 August 2019. The selling
price of the goods amounted to R 9 576-00 (including VAT). The customers were refunded in cash
on the same day. The merchandise was in good condition and returned to inventory. The cost of
the inventory amounted to R 3 200-00.
11) Baba Traders returned part of the inventory purchased from Supplier Z (Note 8). Supplier Z issued
a credit note to Baba Traders amounting to R 7 296-00 (including VAT).
12) Baba Traders rents out a portion of their premises. Baba Traders received the rent for August 2019
on the 7th of August, amounting to R 5 130 (including VAT).
13) Interest received for August 2019 amounted to R 2 280.
14) Credit sales for August 2019 amounted to R 375 000 (excluding VAT). The cost of sales amounted
to R 150 000.
15) A receivable returned goods purchased from Baba Traders. The goods were in good condition. A
credit note was issued the customer amounting to R 7 410-00 (including VAT). The cost of the
goods amounted to R 2 780-00.
16) Bad debts amounting to R 4 560 (including VAT) must be written off on 31 August 2019.
17) On 28 August 2019, the owner withdrew trade inventories with a cost of R 20 000 (excluding VAT)
for personal use.
18) On 29 August 2019 trade inventories with a cost price of R 17 500 (excluding VAT) was donated to
a local welfare organisation.
19) Baba Traders applied for a bank loan. The loan was approved and the loan amounting to
R 120 000 was deposited into the entity’s bank account on 1 August 2019. The first instalment was
paid on 31 August and amounted to R 12 000, of which R 10 800 was interest.
20) Baba Traders received the telephone account for August 2014 on 1 September 2019. The account
amounted to R 1 482-00 (including VAT).
21) Baba Traders paid the fuel account amounting to R 6 400-00 on 31 August 2019. 38% of the
account was in respect of oil and the balance in respect of fuel.
22) On 31 August 2019, customers settled their accounts and Baba Traders banked an amount of
R 22 800-00. The relevant receipts were issued to all the trade receivables.
23) Baba Traders settled the account of Supplier Z on 31 August 2019.
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
7
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
MODULE 5 - QUESTION 2 - Continued
24) SARS transferred R 3 680-00 into the business account of Baba Traders on 31 August 2019.
REQUIRED:
NOTE : ROUND ALL FIGURES TO THE NEAREST RAND.
a) Prepare the journal entries in respect of all the transactions in notes 1 to 23 as given above, in the
accounting records of Baba Traders for August 2019 ONLY.
-
The journal entries must be dated where applicable and narrations are required.
Journal entries must comply with the proper format of a journal entry.
b) Prepare the following accounts in the general ledger of Baba Traders for August 2019:
(1)
(2)
(3)
(4)
Bank account
VAT account
Loan
c) Present the following items in the financial statements of Baba Traders for the month ended 31
August 2019:
(1) Bank
(2) VAT
d) Prepare the following note to the financial statements of Baba Traders for the month ended 31
August 2019:
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
8
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
Module 5 : Question 2 (a) - suggested solution – Baba Traders
Debit - R
Note 1
5/8/2019
Inventory - CA – SoFP
Input VAT – SoFP
Credit - R
17 262.00
2 589.00
Bank – SoFP
19 851.00
Purchased inventory for cash
R 20 360 - (R 20 360 x 2,5%) = R 19 851-00
R 19 851 x 15/115 = R 2 589 – 26
Note 2
Bank - SoFP
22 903.00
Output VAT – SoFP
10/8/2019
2 987.00
Sales
19 916.00
Inventory sold for cash
R 23 370 - (R 23 370 x 2%) = R 22 902-60
R 22 902-60 x 15/115 = R 2 987-30
Note 2
Cost of sales – SoPL
8 200.00
Inventory - CA – SoFP
10/8/2019
8 200.00
Cost of goods sold
Note 3
Vehicles @ cost - NCA – SoFP
370 500.00
Bank – SoFP
15/8/2019
370 500.00
Purchase of asset - no Input Vat can be claimed
Note 4
Rent exp – SoPL
19 826.00
1/8/2019
Input VAT – SoFP
2 974.00
Bank – SoFP
22 800.00
Paid rent for August 2019
R 22 800 x 15/115 = R 2 973,91
Note 5
5/8/2019
Input VAT – SoFP
11 400.00
1 710.00
Bank – SoFP
13 110.00
R 13 110 x 15/115 = R 1 710
Note 6
12/8/2019
Vehicles @ cost - NCA – SoFP
Input VAT – SoFP
198 261.00
29 739.00
Payables -(Bakkie) - CL – SoFP
228 000.00
Purchase of single cab bakkie on credit
R 228 000 x 15/115 = R 29 739,13
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
9
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
Module 5 : Question 2 (a) - Suggested solution - Continued
Debit - R
Note 6
31/8/2019
Payable -(Bakkie) - CL – SoFP
Credit - R
228 000.00
Bank – SoFP
228 000.00
Payable settled on due date.
Note 7
14/8/2019
Machinery @ cost - NCA – SoFP
396 522.00
Input VAT – SoFP
59 478.00
Payable - (Machinery) - CL – SoFP
456 000.00
Purchase of machinery on credit
R 456 000 x 15/115 = R 59 478.26
Note 7
31/8/2019
Payable - Machine - CL – SoFP
5 080.00
Interest expense – SoPL
40 520.00
Bank – SoFP
45 600.00
R 456 000 / 10 = R 45 600 = instalment
R 45 600 - R 40 520(interest) = R 5 080 =(capital)
Payment of first instalment
Note 8
18/8/2019
Inventory - CA – SoFP
74 348.00
Input VAT – SoFP
11 152.00
Trade payable-(Supplier Z) - CL – SoFP
85 500.00
Purchase of inventory on credit from Supplier Z
R 85 500 x 15/115 = R 11 152,17
Note 9
20/8/2019
Bank – SoFP
327 750.00
Output VAT – SoFP
42 750.00
Sales – SoPL
285 000.00
Cash sales
R 285 000 x 15% = R 42 750
OR : R 285 000 x 1.15 = R 327 750
Note 9
20/8/2019
Cost of sales – SoPL
100 000.00
Inventory - CA – SoFP
100 000.00
Cost of inventory sold
Note 10
22/8/2019
Sales – SoPL
8 327.00
OUTPUT VAT – SoFP
1 249.00
Bank – SoFP
9 576.00
Cash refunded to customers that returned goods
R 9 576 x 15/115 = R 1 249,04
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
10
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
Module 5 : Question 2 (a) - Suggested solution - Continued
Debit – R
Note 10
22/8/2019
Inventory - CA – SoFP
Credit - R
3 200.00
Cost of sales -(exp) – SoPL
3 200.00
Cost of sales of goods returned
Note 11
22/8/2019
Trade payable - CL – SoFP
7 296.00
Input VAT – SoFP
952.00
Inventory - CA – SoFP
6 344.00
Inventory returned to supplier &amp; credit note received
R 7 296 x 15/115 = R 951,65
Note 12
22/8/2019
Bank – SoFP
5 130.00
Output VAT – SoFP
669.00
4 461.00
Rent received from tenant for August 2019
R 5 130 x 15/115 = R 669,13
Note 13
31/8/2019
Bank – SoFP
2 280.00
2 280.00
Note 14
31/8/2019
Trade receivables - CA – SoFP
431 250.00
Output VAT – SoFP
56 250.00
Sales – SoPL
375 000.00
Credit sales for August 2019
R 375 000 x 15% = R 56 250
OR : R 375 000 x 1.15 = R 431 250
Note 14
31/8/2019
Cost of sales – SoPL
150 000.00
Inventory - CA – SoFP
150 000.00
Cost of sales of goods sold
Note 15
31/8/2019
Sales – SoPL
OUTPUT VAT – SoFP
6 443.00
967.00
Trade receivables - CA – SoFP
7 410.00
Goods returned by customer and credit note issued
R 7 410 x 15/115= R 966,52
Note 15
31/8/2019
Inventory - CA – SoFP
Cost of sales -(exp) – SoPL
2 780.00
2 780.00
Cost of sales of goods returned
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
11
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
Module 5 : Question2 (a) - Suggested solution - Continued
Debit - R
Note 16
31/8/2019
Credit losses - Exp – SoPL
Credit - R
3 965.00
Input VAT – SoFP
595.00
SoFP
4 560.00
R 4 560 x15/115 = R 594,78
Note 17
Drawings – SoCE
23 000.00
Input VAT – SoFP
28/8/2019
3 000.00
Inventory - CA – SoFP
20 000.00
Inventory used by owner
R 20 000 x 15% = R 3 000
Note 18
Donations - exp – SoPL
20 125.00
Input VAT – SoFP
29/8/2019
2 625.00
Inventory - CA – SoFP
17 500.00
Inventory donated
R 17 500 x 15% = R 2 625
Note 19
Bank – SoFP
120 000.00
Loan - NCL – SoFP
01/8/2019
120 000.00
bank
Note 19
Loan - NCL – SoFP
1 200.00
31/8/2019
Interest exp – SoPL
10 800.00
Bank – SoFP
12 000.00
Paid first instalment on loan
R 12 000(paid) - R 10 800(interest) = R 1 200 (capital)
Note 20
31/8/2019
Telephone exp. (SoPL
1 289.00
Input VAT – SoFP
193.00
Accrued exp - CL – SoFP
1 482.00
August telephone account not paid as at 31/8
R 1 482 x 15/115 = R 193,30
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
12
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
Module 5 : Question 2 (a) - Suggested solution - Continued
Note 21
31/8/2019
Fuel exp – SoPL
3 968.00
Oil exp - SoPL -( R 2 432-00 - R 317,22 = R 2 133-33)
2 115.00
Input VAT – SoFP
317.00
Bank – SoFP
6 400.00
R 6 400 x 38% = R 2 432 = Oil -(incl. VAT)
R 2 432 x 15/115 = R 317,22 = Input VAT
R 6 400 - R 2 432 = R 3 968 = fuel
Settled fuel &amp; oil account for August 2019
Note 22
31/8/2019
Bank – SoFP
22 800.00
Trade receivables - CA – SoFP
22 800.00
Debtors settled accounts
Note 23
31/8/2019
Trade payable -Payable Z - CL – SoFP
78 204.00
Bank – SoFP
78 204.00
Settled account of Payable Z
Note 24
31/8/2019
Bank – SoFP
Vat control – SoFP
3 680.00
3 680.00
Received VAT Refund from SARS - (see opening balance)
Note 16: Bad debts written off
On the date that the goods were sold to the customer the following journal entry have been recorded in
the accounting records:
Dr : Trade receivables - CA - SoFP
R 4 560
Cr: Output VAT - SoFP
R 595
Cr: Sales - SoPL
R 3 965
When writing off the bad debt, the bad debt is now an expense (see journal 16). Although the write off
does not represent a taxable supply, the SARS provides relief in that the VAT input that arises in respect
of the expense may be claimed from the SARS. In this manner, the VAT output that was previously “paid
too much” (when the credit sale was recognised) is recouped.
Note 17: Inventory taken by owner for private use
When the purchase of the trade inventories was recognised, VAT input was claimed. This VAR input was
recouped from the SARS in that it was used to reduce the VAT output on the date of the relevant VAT
return submitted to SARS. These trade inventories were however not used to make taxable supplies
(sales). Consequently no VAT output arose in respect of these trade inventories. If it subsequently appears
that trade inventories were not purchased with the purpose of being sold (i.e. making taxable supplies),
the VAT input, which arose with the recognition of the purchase of the trade inventories, has to be written
back (i.e. credit input VAT). Hence the credit entry against VAT input.
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
13
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
Module 5 : Question 2 (a) - Suggested solution - Continued
Just like with the withdrawal of trade inventories by the owner for personal use, a write-back of the VAT
input that was recognised during the purchase of the trade inventories must take place with the donation
of trade inventories. The reason for the write-back is that the trade inventories were not used for
purposes of being sold (making taxable supplies).
Module 5 : Question (b)(1) - Suggested solution
BANK ACCOUNT - (SoFP)
10/8
Sales
J2
20/8
Sales
J9
22/8
J 12
31/8
1/8
b/f
12 850
J1
19 851
5 130 15/8 Vehicles
J3
370 500
J 13
2 280
1/8
Rent
J4
22 800
Loan
J 19
120 000
5/8
J5
13 110
31/8
J 22
J6
228 000
31/8
VAT Control - SARS refund
J 24
J7
45 600
31/8
Balance c/d
22 903 31/7 Balance b/f
327 750
5/8
Inventory
3 680 31/8 Trade payables / Interest
22/8
Sales
J 10
9 576
31/8
Loan / Interest
J 19
12 000
31/8
Fuel &amp; oil
J 21
6 400
J 23
78 204
818 891
818 891
1/9
Balance b/f
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
314 348
14
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
Module 5 : Question (b)(2) - Suggested solution
VAT CONTROL ACCOUNT - (SoFP)
31/7
Balance b/f
b/f
3 680
10/8
Sales
J2
2 813
5/8
Inventory
J1
2 589
20/8
Sales
J9
42 750
1/8
Rent
J4
2 974
22/8
Inventory returns
J 11
952
5/8
J5
1 710
22/8
Rent
J 12
669
12/8
Vehicles
J6
29 739
31/8
Sales
J 14
56 250
14/8
Machinery
J7
59 478
28/8
Drawings/ Inventory
J 17
3 000
18/8
Inventory
J8
11 152
29/8
Donations
J 18
2 625
22/8
Sales returns
J 10
1 249
31/8
Bank - SARS Refund
J 24
3 680
28/8
Sales returns
J15
967
31/8
J 16
595
31/8
Telephone
J 20
193
31/8
Fuel
J 21
317
31/8
Balance c/d
2 204
114 943
1/9
Balance b/f
114 943
2 204
Module 5 : Question (b)(3) - Suggested solution
31/7
Balance b/f
31/8
Sales
J 14
275 620
31/8
Returns
J 15
7 410
431 250
31/8
J 16
4 560
31/8
Bank
J 22
22 800
31/8
Balance c/d
672 100
706 870
1/9
Balance b/f
706 870
672 100
Module 5 : Question (b)(4) - Suggested solution
LOAN - (NCL -SoFP)
31/8
Bank
31/8
Balance c/d
J 19
1 200
1/8
Bank
J 19
120 000
118 800
120 000
120 000
1/9
Balance b/f
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
118 800
15
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
Module 5 : Question ( c) (1,2,3) - Suggested solution
Statement of financial position
as at 31 August 2019
1
2
3
Current liabilities
Bank overdraft
Current assets
Other current assets
Current assets
2019
R
314 348
2 204
672 100
Module 5 : Question (d) (1) - Suggested solution
Notes to the financial statements for the
month ended 31 August 2019
1
2019
R
672 100
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
16
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
MODULE 5 - QUESTION 3
Jack’s Paints is a registered VAT vendor and so are all entities trading with it. VAT is levied at 15%. All
amounts exclude VAT.
The following transactions occurred during August 2020.
1. Purchased goods for cash, R 44 000.
2. Sold goods for cash, R 10 000.
3. Paid salaries and wages by EFT, R 50 000.
4. Paid the monthly rent by E-wallet, R 2 750.
5. Incurred bank charges according to the bank statement amounting to R 400.
6. Received interest on an investment, R 1 000
7. Purchased equipment on credit from Star Office Furniture, R 27 500.
8. Deposit from SARS appeared on bank statement for VAT, R 2 350-00.
9. Credit sales to customers amounted to R 25 000.
REQUIRED:
a) Prepare the journal entries for transaction number 1 to 8 as given above.
o Journals must be properly numbered
o Journals must be dated
o Journal narrations are required
b) Prepare the VAT account in the general ledger of Jack’s Paints for August 2020 if the balance of
the VAT account amounted to R 2 350-00 (debit) on 31 July 2020.
o The account must be properly balanced and cross referenced.
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
17
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
QUESTION 3 MEMO
DETAILS
TR.1
TR.2
DR
CR
Inventory - CA - SoFP
Input VAT - SoFP (R44 000 x 15%)
Bank - SoFP
Purchased inventory for cash
44 000
6 600
Bank - SoFP
11 500
50 600
Output - VAT - SoFP (10 000 x 15%)
Revenue - SoPL
1 500
10 000
Sold goods for cash
TR. 3
TR.4
TR.5
TR.6
TR.7
TR. 8
Salaries and Wages - SoPL
Bank - SoFP
Paid salaries and wages via EFT - No VAT
50 000
Rent exp - SoPL
Input VAT - SoFP (R2 750 x 15%)
Bank - SoFP
Paid monthly rent by E-wallet
2 750
413
Bank charges - SoPL
Input VAT - SoFP - (R400 X 15%)
Bank - SoFP
Bank charges incurred per bank statement
Investment/ Bank - SoFP
Equipment - NCA - SoFP
Input VAT - SoFP (R27 500 X15%)
Payable - CL - SoFP
Purchased equipment on credit from Star Office Furn
Bank - SoFP
50 000
3 163
400
60
460
1 000
1 000
27 500
4 125
31 625
2 350
VAT control account (SARS refund)
SARS refund of VAT due to Jack's Paits
TR.9
Trade receivables - CA - SoFP
Output VAT - SoFP (25 000 X 15%)
Revenue - SoPL
Goods sold on credit to customers
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
2 350
28 750
3 750
25 000
18
CACC011 -Module 5- VAT -Question Book AND Memo - 2021
VAT CONTROL ACCOUNT - (SoFP)
Balance b/f
TR. 1
Inventory
TR.4
Rent
TR.5
Bank Charges
TR.7
Equipment
b/f
2 350 TR.2
Sales
1 500
6 600
Bank – (Sars Refund)
2 350
3 750
Balance c/d
5 948
413 TR.9
60
4 125
13 548
Balance b/f
13 543
5 948
COPYRIGHT RESERVED – A BRANDT , R PRINSLOO, G NYIRENDA &amp; TG MALEKA
19
```