Local Fashion (Pty) Ltd (LF) designs and produces fashion garments using local materials for local and...

 

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Local Fashion (Pty) Ltd (LF) designs and produces fashion garments using local materials for local and international distribution. The company has a financial year ending on 31 December each year and is a registered value added tax (VAT) vendor. LF entered into the following transactions for the 2017 year of assessment. All transactions (unless otherwise stated) took place between VAT registered vendors and the company is in possession of all the necessary documentation. All amounts are stated inclusive of VAT where applicable. 1. Sales of local fashion garments totaling R1,300,000 to customers in South Africa and R250,000 to foreign customers outside South Africa. 2. Sale of stock used previously as window display items for R25,000. The original market value of the stock was R30,000 at the date of manufacture. 3. Interest earned on cash deposits of R2,000. 4. Dividends received of R2,000 from a local company in which LF holds an investment interest. 5. Legal costs of R30,000 defending a claim against LF's profits by a local designer who claimed that the designs used by LF had been copied. 6. Courier fees for delivery of garments totaling R15,000 to customers in South Africa and R29,000 to customers outside South Africa. 7. Wages payable to the local dressmakers employed by LF of R350,000. 8. Bad debts written off of R22,000. 9. Evening function for the local designers costing R20,000 after a runway show hosted by LF costing R100,000. The runway show generates new garment orders. 10. Bank charges on company bank accounts of R3,000. (a) Calculate the input value added tax (VAT) and output VAT arising from each of the transactions (1) to (10). Note: You should format your answers in two columns labelled 'Input VAT' and 'Output VAT' and indicate by the use of zero (0) any item which does not result in either input VAT or output VAT. (10 marks) Local Fashion (Pty) Ltd (LF) designs and produces fashion garments using local materials for local and international distribution. The company has a financial year ending on 31 December each year and is a registered value added tax (VAT) vendor. LF entered into the following transactions for the 2017 year of assessment. All transactions (unless otherwise stated) took place between VAT registered vendors and the company is in possession of all the necessary documentation. All amounts are stated inclusive of VAT where applicable. 1. Sales of local fashion garments totaling R1,300,000 to customers in South Africa and R250,000 to foreign customers outside South Africa. 2. Sale of stock used previously as window display items for R25,000. The original market value of the stock was R30,000 at the date of manufacture. 3. Interest earned on cash deposits of R2,000. 4. Dividends received of R2,000 from a local company in which LF holds an investment interest. 5. Legal costs of R30,000 defending a claim against LF's profits by a local designer who claimed that the designs used by LF had been copied. 6. Courier fees for delivery of garments totaling R15,000 to customers in South Africa and R29,000 to customers outside South Africa. 7. Wages payable to the local dressmakers employed by LF of R350,000. 8. Bad debts written off of R22,000. 9. Evening function for the local designers costing R20,000 after a runway show hosted by LF costing R100,000. The runway show generates new garment orders. 10. Bank charges on company bank accounts of R3,000. (a) Calculate the input value added tax (VAT) and output VAT arising from each of the transactions (1) to (10). Note: You should format your answers in two columns labelled 'Input VAT' and 'Output VAT' and indicate by the use of zero (0) any item which does not result in either input VAT or output VAT. (10 marks)

Answer rating: 100% (QA)

Local Fashion Pty Ltd a Value added tax VAT for the 2017 year of assessmen... View the full answer