Question 1: Barni Ltd a UK company that sells various items falling under Standard Rated, Zero-rated,...
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Question 1: Barni Ltd a UK company that sells various items falling under Standard Rated, Zero-rated, and Exempt goods in UK and exports overseas. Also, Barni Ltd purchases various items falling under Standard rated, Zero-rated, and Exempt goods. from UK suppliers and from overseas. On 1 January 2018, Barni Ltd has registered for VAT based on compulsory Registration. The following transactions occurred during the quarter ended 31 March 2021: (i) Barni Ltd Sold standard-rated goods of £420,000 (including VAT), £80,000 Zero Rated goods, and £20000 Exempt goods. (ii) Barni Ltd exported goods falling under the standard category of VAT £35,000 and services £12,000. (iii) Barni Ltd purchased Standard Rated goods of £80,000 (excluding VAT). Zero Rated goods of £50,000, and £25000 of exempt goods. (iv) Barni Ltd imports goods worth £20,000 and services of £10,000. Import duty applicable for the import is 20% in the UK. (v) Barni Ltd incurred various expenses relating to entertainment and spent £12,000 (including VAT). The break-up of this expense is £3,600 for UK Customers' entertainment, £2,400 for staff entertainment, £6,000 for overseas customers. (vi) In February 2020, Company purchased 2 cars costing £36,000 each (including VAT). One is used by the Managing Director for his personal use and the other one is fully for business use by the salesperson. (vii) Barni Ltd purchased fuel costing £10,000 (excluding VAT) during the quarter ended 31/3/2021. Note: If not mentioned specifically, all figures are VAT exclusive. You are required to: a) Prepare a VAT Account for the quarter ended 31 March 2021 and advise the due date for the payment of VAT. With special note demonstrate the non-deductible input VAT you come across in the above question. (12 marks) b) James started his business on 1 January 2021 and has not registered for VAT. He sells both standard rated and exempt goods, the turnover from the previous 5 months is listed separately for Standard and exempt goods are as below: Months Standard Rated sales Exempt sales £ 5,000 7,000 8,000 10,000 12,000 £ January 2021 18,000 February 2021 30,000 March 2021 40,000 April 2021 May 2021 45,000 50,000 James has purchased machinery in January 2021, and he found out that it was not suitable for his business and sold the same for £5,000 in February 2021. This sale is included in the February sales under Standard rated sales. Applying the concept of the Registration issue of VAT for the above case study, Explain and advise James of the due date for notifying HMRC and the effective date of VAT registration. Substantiate your answer with suitable calculations. (150-200 words) (3 marks) 15 marks) (Total Question 1: Barni Ltd a UK company that sells various items falling under Standard Rated, Zero-rated, and Exempt goods in UK and exports overseas. Also, Barni Ltd purchases various items falling under Standard rated, Zero-rated, and Exempt goods. from UK suppliers and from overseas. On 1 January 2018, Barni Ltd has registered for VAT based on compulsory Registration. The following transactions occurred during the quarter ended 31 March 2021: (i) Barni Ltd Sold standard-rated goods of £420,000 (including VAT), £80,000 Zero Rated goods, and £20000 Exempt goods. (ii) Barni Ltd exported goods falling under the standard category of VAT £35,000 and services £12,000. (iii) Barni Ltd purchased Standard Rated goods of £80,000 (excluding VAT). Zero Rated goods of £50,000, and £25000 of exempt goods. (iv) Barni Ltd imports goods worth £20,000 and services of £10,000. Import duty applicable for the import is 20% in the UK. (v) Barni Ltd incurred various expenses relating to entertainment and spent £12,000 (including VAT). The break-up of this expense is £3,600 for UK Customers' entertainment, £2,400 for staff entertainment, £6,000 for overseas customers. (vi) In February 2020, Company purchased 2 cars costing £36,000 each (including VAT). One is used by the Managing Director for his personal use and the other one is fully for business use by the salesperson. (vii) Barni Ltd purchased fuel costing £10,000 (excluding VAT) during the quarter ended 31/3/2021. Note: If not mentioned specifically, all figures are VAT exclusive. You are required to: a) Prepare a VAT Account for the quarter ended 31 March 2021 and advise the due date for the payment of VAT. With special note demonstrate the non-deductible input VAT you come across in the above question. (12 marks) b) James started his business on 1 January 2021 and has not registered for VAT. He sells both standard rated and exempt goods, the turnover from the previous 5 months is listed separately for Standard and exempt goods are as below: Months Standard Rated sales Exempt sales £ 5,000 7,000 8,000 10,000 12,000 £ January 2021 18,000 February 2021 30,000 March 2021 40,000 April 2021 May 2021 45,000 50,000 James has purchased machinery in January 2021, and he found out that it was not suitable for his business and sold the same for £5,000 in February 2021. This sale is included in the February sales under Standard rated sales. Applying the concept of the Registration issue of VAT for the above case study, Explain and advise James of the due date for notifying HMRC and the effective date of VAT registration. Substantiate your answer with suitable calculations. (150-200 words) (3 marks) 15 marks) (Total
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a VAT Account for the quarter ended 31 March 2021 Debit Standard Rated Output VAT 420000 x 20 84000 ... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
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