dent of the Republic, commenced trading on 1 — It shases them from local manufacturers and en oy i z (including shops and hotels) It is a ‘category B’ vendor. Its first ary 2023 to 28 February 2023. aan f Af imited dis ement an accounting package immediately (there a ey Beeson), Faaeniting records were manually prepared by its s for the months of January 2023 and February 2023. When completing the value-added + ifs income and expenditure for the two-month period 1 January 2023 to 28 February 2023 (unless othenvise stated, all amounts are inclusive of value-added tax, when applicable), and * its three ledger accounts for the two-month period | January 2023 to 28 February 2023 (an ‘Output value-added tax account, an input value-added tax account and a value-added tax liability account), A summary of its receipts, accruals and expenditure for its two-month period 1 January 2023 to 28 February 2023 follows: Receipts and accruals Sales to local customers Sales to foreign customers ‘57500 Interest on current account 300 Indemnity award (note 1) ib Expenditure and provisions a Purchases (all from vendors) pene of pamphlets for distribution oo il party (food and beverag, unc! oa Tein eee (ee to launch its products to its potential customers 4025 reciation Sie, 7531 Bad debt (a foreign 7475 debtor w igang me tea, coffee, milk, sugar and biscuits aod eae iscuits purchased) 1610 els of facsimile morn? #4 & Warehouse he s otra machine ed Pe Tmachine (it supplies mineral wat 1840 ater to employees ae ‘© employees and customers) a Premiums for delivers <2 LEht delivery vehie) a0 Diver PEs for gah Vehicle ‘ones the stolen ° 320 Buyer's out oftown trip note», “Shicle ‘two? — tye’ "Olen Vehicle an ’ P (note 3) the replace, Placement vehicle 1g 828 5 8972 ount on 26 a ee i - Out of Africa (Pty) Limited's t, a double cab light deliv: i i ate sector. This double cab Tate eWay weet ee (Pty) Limi R63 750 (R525 500 plus value-added tax of R78 750). Its ou she cnesteenie “xe of this double cab Tight delivery vehicle for the entire eee ee expenses for this double cab light delivery vehicle are bore by i i ~ secondly, a new delivery vehicle was purchased by Out of AMfiiea (Pty) Limi Limited. It was also rehased on 1 January 2023. It was purchased for R282 900 fotos plus value-added fax of R36 900). It was stolen three weeks later (see note 1 above). = Thirdly, a second-hand delivery vehicle purchased by Out of Africa (Pty) Limited, and paid for, on 1 February 2023 to replace the delivery vehicle that was stolen. It was purchased from a non-vendor for R172 500 (R172 500 plus value-added tax of Rail). No depreciation has been provided for a plot of land purchased by Out of Africa (Pty) Limited ‘on 5 January 2023 from a property developer for R2 300 000 (R2 000 000 plus ‘value-added tax of R300 000). Registration of transfer for this land took place on 10 February 2023. The R2 300 000 purchase price of the land is being settled in five equal instalments ‘of R460 000 each. The first instalment was made on 28 February 2023. It intends to erect its own warehouse and administration office on the land. Construction will commence in April 2023. | Out of Africa (Pty) Limited’s buyer usual place of residence is in Durban. He flew from Durban to Richards Bay to purchase trading stock from manufacturers based in Zululand. The total cost of his trip to Zululand was R4 689. This amount is made up as follows: Airfare (R600 plus value-added tax of R90 plus airport taxes of R345) 1035 Hotel accommodation (R1 960 plus value-added tax of R294) 2254 Car hire account made up as follows: bi ~Rental (R580 plus value-added tax of R87) an ~Fuel (R245 plus value-added tax of “nil’) ; aa = Insurance premiums (R280 plus value-added tax of R42) a ~Service fees (R60 plus value-added tax of R9) 7, 1305 Subsistence allowance paid to him (three days at R435 a day) ie P 5.897 Out of Africa (Pty) Limited’s three ledger account's are as follows: Value-Added Tax Output Account — Debit nor WFebruary 2023 Value-added tax liability account 33220 te tdded ‘Tax Output Account — Credit “atte anol B February 2023 Sales ((R119 600 + R57 500) oe 15%! 115%) 120 BFebniary 2023 Interest on current account (R a(RI 265 * le (R603 75! ‘vehicle (R 00 « 15% / 115%) 15%) ; ice ut 10 15% tN Eee ' 1.035 * 15% / 115%) i ee Is ee “RI 840+ R345) * 15% / 115%) Rentals: ‘4 15% / 115%) : rin 21 R920 TRL 140-+ R828) * 15% / nu on Bie out of town trip (R90+R294 + R87 + ‘Value-Added Tax Input ‘Account — Credit a on pe February 2023 Value-added tax liability 2°cou 431.45 Value-Added Tax Liability Account — Debit ane 28 February 2023 Input value-added tax aun 1 March 2023 —_Balance brought down 408.205 Value-Added Tax Liability Account — Credit 28 February 2023 Output value-added tax oa 28 February 2023 Balance carried down. ae 28 ‘The financial accountant of Out of Africa (Pty) Limited is concerned about the accuracy of the Value-added tax treatment applied to the receipts, accruals and expenditure items posted to the value-added tax output and value-added tax input accounts (see above). He expects that the refund of value-added tax of R408 225 reflected in the value-added tax liability account general ledger account (see above) in its accounting records will be queried and then audited by the Commissioner. He has therefore requested your assistance in checking the accuracy of the value-added tax treatment of each receipt, accrual and expenditure item reflected above. He has also requested that you prepare a schedule of correcting journal entries (when applic i S cable) to correct any incorrect postings to the value-added tax accounts. e : : _ é ee : : ey EA would like you to inform him of the revised net amount of value-added tax due 0, oF . the Commissioner for Out of Africa (Pty) Limited’s first two-month tax period. You are required to 1 pre Proficonest a a fer’ of: Correcting entries that should be put through the journal of Out of Africa orrect the posting for each income and expenditure item to the value-added {ax output and input accounts for its first two- tax period | January s for its first i wo-month tax 1Ja 2023 to 28 February th a brief explanati, ii i i Pea J planation. Expl ts, . ine the f Rey ein eon es value-added tax due to, or from, the Commissioner for its determination with the vefued dye, 2023 to 28 February 2023. (Commence your due of R408 i ace ; a unt and hen make the necessary adh fe reflected in its value-added tax liability