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Practice Question 2 For VAT 2018
Practice Question 2 For VAT 2018
Practice Question 2 For VAT 2018
1. The company is registered on the invoice basis for VAT purposes under category B.
2. All amounts include VAT
Income and expenses for the two months ended 30 June 2018 are detailed below as follows:
Income and expenses for the two months ended 30 June 2018 Note Amount - R
Income
Local sales 230,000
Export sales 1 115,000
Sale of scrap off-cut timber 1,150
Interest income 2,000
Indemnity income 2 58,650
Proceeds on sale of an old manufacturing machine 50,000
Expenditure
Purchases of timber 23,000
Monthly rental paid for the lease of the factory building for May and 4,600
June 2018
Depreciation 3 50,000
Bad debts 4 13,500
Purchase of second hand machine 5 100,000
Insurance premiums 6 3,450
Bank charges 7 115
Interest paid on bank overdraft 3,000
Staff refreshments 8 575
Salary and wages 30,000
Flight costs paid to South African Airways (“SAA”) 9 10,000
3.1 A manufacturing machine was purchased two years ago for R200,000.
3.2 A double cab bakkie was purchased on 1 May 2018 for R300,000. The financial director
has the sole use of the double cab and he bears the full cost of maintaining the vehicle.
4. Bad debts written off comprise the following:
Required
You are required to calculate the VAT payable by/refundable to AB Manufacturing Limited for the
two month VAT period ended 30 June 2018. Round all amounts to the nearest rand. Give brief
reasons where the amount is Nil.