Journals and Value added tax (VAT) FAC1502 Journals and Value added tax (VAT) Journals and Value added tax (VAT)

Journals and VAT Types of journals The cash receipts journal and the cash payments journal The purchases journal and the purchases returns journal The sales journal and the sales returns journal The general journal Types of journals The cash receipts journal and The cash payments journal The purchases journal and The purchases returns journal The sales journal and The sales returns journal The general journal

Journals and VAT Ledger accounts Dr Sales (In PnP’s books) Cr Date Detail Fol R Debtor 10.00 Dr VAT Output (In PnP’s books) Cr Date Detail Fol R Debtor 1.40 If you want to buy a pencil at Pick n Pay (PnP) you have to pay R10.00 for the pencil as well as R1.40 for the Vat. The R10.00 is PnP’s money and the R1.40 is the Governments (SARS) money.   To grasp the principles of VAT, work through the following exercise thoroughly. VAT at 14% is applicable. Dr You as a Debtor (In PnP’s books) Cr Date Detail Fol R Sales + VAT 11.40

Exercise Trial Balance of Rundu Dealers as at 28 February 20.4 Dr Cr R Capital 177 150 Land and Buildings at cost 145 200 Equipment at cost 29 700 Inventory – 1 November 20.3 19 200 Bank 4 467 W Wolf 1 583 L Lion 770 T Tiger 2 310 VAT Input 2 715 VAT Output 2 925 Sales 86 400 Purchases 45 650 Distribution, admin and other expenses 20 500 268 785 268 785 The following information relates to Rundu Dealers, who is registered as a VAT vendor. The Trial Balance of Rundu Dealers as at 28 February 20.4. An example from your study guide

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 The transactions for March 20.4

Exercise Required: 1 Record the above transactions in the following subsidiary journals, properly totalled, of Rundu Dealers for March 20.4 (a) Cash receipts journal (analysis columns for bank, sales, VAT Output, debtors, VAT Input (dr), discount allowed and sundries) (b) Cash payments journal (analysis columns for bank, purchases, creditors, discount received, VAT Input, VAT Output (cr) and sundries) (c) Sales journal (analysis columns for VAT Output, sales and debtors) (d) Purchases journal (analysis column for VAT Input, purchases and creditors) (e) Sales returns journal (analysis columns for VAT Output, sales returns and debtors) (f) Purchases returns journal (analysis columns for VAT Input, purchases returns and creditors) (g) General journal 2 Post the entries recorded above to the VAT Input and VAT Output accounts. Close off these accounts to the VAT Control account. Balance the VAT Control account at 31 March 20.4, the end of the business’ VAT period Required: 1 Record the above transactions in the following subsidiary journals of Rundu Dealers for March 20.4, properly totalled.   (a) Cash receipts journal (analysis columns for bank, sales, VAT Output, debtors, VAT Input (dr), settlement discount granted and sundries) (b) Cash payments journal (analysis columns for bank, purchases, creditors, settlement discount received, VAT Input, VAT Output (cr) and sundries) (c) Sales journal (analysis columns for VAT Output, sales and debtors) (d) Purchases journal (analysis column for VAT Input, purchases and creditors) (e) Sales returns journal (analysis columns for VAT Output, sales returns and debtors) (f) Purchases returns journal (analysis columns for VAT Input, purchases returns and creditors) (g) General journal 2 Post the entries recorded above to the VAT Input and VAT Output accounts. Close off these accounts to the VAT Control account. Balance the VAT Control account at 31 March 20.4, the end of the business’ VAT period

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 March 1 Cash sales, R15 504 Cash sales means you receive money, record it in the Cash Receipts Journal. Vat is included in the amount, now you have to work out the sales portion or the Vat portion.

VAT Calculations Required: R15 504 X Calculate VAT. Value given To calculate Vat start with the total amount given and that is R15 504

VAT Calculations Required: R15 504 X Calculate VAT. Value given What you have in percentage (%) What you have in %

VAT Calculations Required: R15 504 X Calculate VAT. 114% Value given   What you have in %

VAT Calculations Required: R15 504 X Calculate VAT. 14% 114% = R1 904 What you want in % R15 504 X 14% 114% What you want in % = 14%   What you have in % = R1 904

SettlementDiscount granted Exercise Rundu Dealers 15 504 -1 904 Cash Receipts Journal - March 20.4 Date Details Fol Bank Dr Sales Cr VAT Output Debtors VAT Input SettlementDiscount granted Sundry accounts R 1 15 504 13 600 1 904 7 W Wolf L Lion 1 469 713 1 583 (14*)# (7)# (100) (50) 14 O Old 285 6 840 6 000 35 840 770 250 Equip ment 24 811 19 600 2 779 2 353 (21) (150) L16 L15 Sales are R15 504 – R1 904 = R13 600 *Discount includes 14% VAT therefore R15 504/1 X 14/114 = R1 904 #VAT Input must be debited the reason for the ()

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 March 5 Paid the account of T Tiger by cheque after deducting R114 discount

Exercise Trial Balance of Rundu Dealers as at 28 February 20.4 Dr Cr R Capital 177 150 Land and Buildings at cost 145 200 Equipment at cost 29 700 Inventory – 1 November 20.3 19 200 Bank 4 467 W Wolf 1 583 L Lion 770 T Tiger 2 310 VAT Input 2 715 VAT Output 2 925 Sales 86 400 Purchases 45 650 Distribution, admin and other expenses 20 500 268 785 268 785 How much did Rundu Dealers owe T Tiger. The Trial Balance will show you that R2 310

Journals and VAT Ledger accounts Dr Purchases Cr Dr VAT Input Cr Date Detail Fol R Creditor (T Tiger) 2 026 Dr VAT Input Cr Date Detail Fol R Creditor (T Tiger) 284 The transaction was recorded like this when Rundu Dealers purchased from T Tiger. The R114 deduction is from the total amount owing due to T Tiger R2 310 and Vat is included in this amount. Dr Creditor (T Tiger) Cr Date Detail Fol R Purchases 2 310

VAT Calculations Required: Calculate VAT. R114 X 14% 114% = R14 What you want in % R114 X 14% 114% Now you need to work out the portion of that Vat in the discount because you need to subtract that from the original Vat receivable.   What you have in % = R14

Rundu Dealers Cash Payments Journal - March 20.4 Exercise Date Details Fol Bank Cr Pur-chases Dr Credi- tors VAT Input VAT Output Settle-ment Dis-count received Sundry accounts R 5 T Tiger 2 196 2 310 (14) (100) 23 Cheetah 1 140 140 1 000 Carriage on purchases 29 Cash 5 746 Salaries and Wages B Bam 7 980 7 000 980 17 062 1 120 6 746 L15 The R14 is Vat OUTPUT (a CR as the brackets indicate) and not Vat Input (to increase the amount owed to the South African Revenue Service) the R100 (a CR as the brackets indicate) is settlement discount received.

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 7 Received a cheque from W Wolf for R1 469 in full settlement of his account and

Exercise Trial Balance of Rundu Dealers as at 28 February 20.4 Dr Cr R Capital 177 150 Land and Buildings at cost 145 200 Equipment at cost 29 700 Inventory – 1 November 20.3 19 200 Bank 4 467 W Wolf 1 583 L Lion 770 T Tiger 2 310 VAT Input 2 715 VAT Output 2 925 Sales 86 400 Purchases 45 650 Distribution, admin and other expenses 20 500 268 785 268 785 W Wolf owe R1583 thus the discount is R1 583 – R1 469 = R114. You know that there is Vat in this discount.

VAT Calculations Required: Calculate VAT. R114 X 14% 114% = R14 What you want in % R114 X 14% 114% Calculate the Vat What you have in % = R14

SettlementDiscount granted Exercise Rundu Dealers Cash Receipts Journal - March 20.4 Date Details Fol Bank Dr Sales Cr VAT Output Debtors VAT Input SettlementDiscount granted Sundry accounts R 1 15 504 13 600 1 904 7 W Wolf L Lion 1 469 713 1 583 (14*)# (7)# (100) (50) 14 O Old 285 6 840 6 000 35 840 770 250 Equip ment 24 811 19 600 2 779 2 353 (21) (150) L16 L15 The R14 is Vat INPUT (a DR as the brackets indicate) and not Vat Output (to reduce the amount owed to the South African Revenue Service) the R100 (a DR as the brackets indicate) is settlement discount granted. *Discount includes 14% VAT therefore R114/1 X 14/114 = R14 #VAT Input must be debited the reason for the ()

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 7 Received a cheque from L Lion for R713 and allowed R57 discount

Exercise Trial Balance of Rundu Dealers as at 28 February 20.4 Dr Cr R Capital 177 150 Land and Buildings at cost 145 200 Equipment at cost 29 700 Inventory – 1 November 20.3 19 200 Bank 4 467 W Wolf 1 583 L Lion 770 T Tiger 2 310 VAT Input 2 715 VAT Output 2 925 Sales 86 400 Purchases 45 650 Distribution, admin and other expenses 20 500 268 785 268 785 L Lion owe R770. R770-R713 = R57 discount in full settlement.

VAT Calculations Required: Calculate VAT. R57 X 14% 114% = R7 What you want in % R57 X 14% 114% Calculate the Vat in the discount of R57. What you have in % = R7

SettlementDiscount granted Exercise Rundu Dealers Cash Receipts Journal - March 20.4 Date Details Fol Bank Dr Sales Cr VAT Output Debtors VAT Input SettlementDiscount granted Sundry accounts R 1 15 504 13 600 1 904 7 W Wolf L Lion 1 469 713 1 583 (14*)# (7)# (100) (50) 14 O Old 285 6 840 6 000 35 840 250 Equip ment 24 811 19 600 2 779 2 353 (21) (150) L16 L15 The R7 is Vat INPUT (a DR as the brackets indicate) and not Vat Output (to reduce the amount owed to the South African Revenue Service) the R50 (a DR as the brackets indicate) is settlement discount granted. *Discount includes 14% VAT therefore R57/1 X 14/114 = R7 #VAT Input must be debited the reason for the ()

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 12 Received an account from Stationers Ltd for the printing of documents, R684. Remember to work out the Vat Input.

Journals General Journal - March 20.4 Exercise Date Details Fol Total Debit Credit 12 Printing VAT Input Stationers Ltd/Creditors control Account received for printing L15 600 84 684 31 VAT Control Transfer of VAT Input to the VAT control account L17 5 627 VAT Output Transfer of VAT Output to the VAT control account L16 6 131 This transaction cannot be entered in one of the journals and is entered in the general journal. Always start with the debit entries first. Printing debit of R600, Vat Input debit by R84 and Stationers Ltd/Creditors control credit of R684. The narration is very important since it gives the reason for the entry, e.g. account received for printing.

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 13 Credit sales: L Lion R2 280, W Wolf R1 140.

Journals Sales Journal - March 20.4 Purchases Journal - March 20.4 Exercise Journals Sales Journal - March 20.4 Date Details Fol Sales Cr VAT Output Debtors Dr R 13 L Lion 2 000 280 2 280 W Wolf 1 000 140 1 140 3 000 420 3 420 L16 Purchases Journal - March 20.4 Calculate the Vat and because this transaction is on credit use the Sales journal to record it. L Lion Sales R2 000, Vat output R280 and Debtors R2 280. W Wolf Sales R1 000, Vat output R140 and Debtors R1 140 Date Details Fol Purchases Dr VAT Input Creditors Cr R 28 T Tiger 12 750 1 785 14 535 L15

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due. Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 14. Sold an old typewriter to O Old for R285 and received his cheque for the amount due.

SettlementDiscount granted Exercise Rundu Dealers Cash Receipts Journal - March 20.4 Date Details Fol Bank Dr Sales Cr VAT Output Debtors VAT Input SettlementDiscount granted Sundry accounts R 1 15 504 13 600 1 904 7 W Wolf L Lion 1 469 713 1 583 (14*)# (7)# (100) (50) 14 O Old 285 6 840 6 000 35 840 250 Equip ment 24 811 19 600 2 779 2 353 (21) (150) L16 L15 Calculate the Vat. A Cash received transaction is recorded in the Cash Received journal, Bank R285, Vat output R35 and Because you are not selling typewriters everyday this transaction is a sundry account item, show the R250 and explain the reason, Equipment. *Discount includes 14% VAT therefore R285/1 X 14/114 = R35 #VAT Input must be debited the reason for the ()

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due. Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 14 Cash sales, R6 840

SettlementDiscount granted Exercise Rundu Dealers Cash Receipts Journal - March 20.4 Date Details Fol Bank Dr Sales Cr VAT Output Debtors VAT Input SettlementDiscount granted Sundry accounts R 1 15 504 13 600 1 904 7 W Wolf L Lion 1 469 713 1 583 (14*)# (7)# (100) (50) 14 O Old 285 6 840 6 000 35 840 770 250 Equip ment 24 811 19 600 2 779 2 353 (21) (150) L16 L15 Calculate the Vat. Bank R6 840, Sales 6 000 and Vat output R840. *Discount includes 14% VAT therefore R6 840/1 X 14/114 = R840 #VAT Input must be debited the reason for the ()

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due. Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57.

Journals Sales returns Journal - March 20.4 Exercise Journals Sales returns Journal - March 20.4 Date Details Fol Sales Returns Dr VAT Output Debtors Cr R 21 L Lion 50 7 57 L16 Purchases returns Journal - March 20.4 Calculate the Vat. This is a Sales return transaction in the Sales Returns journal, Sales return R50, Vat output R7 and Debtors R57. Date Details Fol Purchases returns Cr VAT Input Creditors Dr R 30 T Tiger 700 98 798 L15

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due. Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140.  

Rundu Dealers Cash Payments Journal - March 20.4 Exercise Date Details Fol Bank Cr Pur-chases Dr Credi- tors VAT Input VAT Output Settle-ment Dis-count received Sundry accounts R 5 T Tiger 2 196 2 310 (14*) (100) 23 Cheetah 1 140 140 1 000 Carriage on purchases 29 Cash 5 746 Salaries and Wages B Bam 7 980 7 000 980 17 062 1 120 (14) 6 746 L15 Calculate the Vat. Bank R1 140, Vat input R140 and because this transaction is not part of your day to day business, record it under sundry accounts as R1 000 and give the reason as Carriage on purchases.

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due. Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 28 Received a credit invoice from T Tiger for goods purchased, R14 535.

Journals Sales Journal - March 20.4 Purchases Journal - March 20.4 Exercise Journals Sales Journal - March 20.4 Date Details Fol Sales Cr VAT Output Debtors Dr R 13 L Lion 2 000 280 2 280 W Wolf 1 000 140 1 140 3 000 420 3 420 L16 Purchases Journal - March 20.4 Calculate the Vat. In the Purchases journal, Purchases R12 750, Vat input R1 785 and Creditors R14 535. Date Details Fol Purchases Dr VAT Input Creditors Cr R 28 T Tiger 12 750 1 785 14 535 L15

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due. Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 29 Issue cheques for salaries and wages, R5 746

Rundu Dealers Cash Payments Journal - March 20.4 Exercise Date Details Fol Bank Cr Pur-chases Dr Credi- tors VAT Input VAT Output Settle-ment Dis-count received Sundry accounts R 5 T Tiger 2 196 2 310 (14*) (100) 23 Cheetah 1 140 140 1 000 Carriage on purchases 29 Cash 5 746 Salaries and Wages B Bam 7 980 7 000 980 17 062 1 120 (14) 6 746 L15 Remember no vat on Salaries and wages. This is also a sundry account record. In the Cash Payments journal Bank R5 746 and R5 746 under sundry account and the reason is Salaries and wages.

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due. Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 29 purchases from B Bam, R7 980

Rundu Dealers Cash Payments Journal - March 20.4 Exercise Date Details Fol Bank Cr Pur-chases Dr Credi- tors VAT Input VAT Output Settle-ment Dis-count received Sundry accounts R 5 T Tiger 2 196 2 310 (14*) (100) 23 Cheetah 1 140 140 1 000 Carriage on purchases 29 Cash 5 746 Salaries and Wages B Bam 7 980 7 000 980 17 062 1 120 (14) 6 746 L15 Calculate the Vat. In the Cash Payments journal Bank R7 980, purchases R7 000 and Vat input R980.

Exercise TRANSACTIONS FOR MARCH 20.4 March 1 Cash sales, R15 504 5 Paid the account of T Tiger by cheque after deducting R114 discount 7 Received a cheque from W Wolf for R1 469 in full settlement of his account Received a cheque from L Lion for R713 and allowed R57 discount 12 Received an account from Stationers Ltd for the printing of documents, R684 13 Credit sales: L Lion R2 280, W Wolf R1 140 14 Sold an old typewriter to O Old for R285 and received his cheque for the amount due. Cash sales, R6 840 21 Issue a credit note to L Lion for an overcharge on the invoice of the 13th, R57 23 Paid C Cheetah by cheque for carriage on goods purchased, R1 140 28 Received a credit invoice from T Tiger for goods purchased, R14 535 29 Issue cheques for salaries and wages, R5 746 and for purchases from B Bam, R7 980 30 Issue a debit note to T Tiger for goods returned to him, R798 On March 30 Issue a debit note to T Tiger for goods returned to him, R798

Journals Sales returns Journal - March 20.4 Exercise Journals Sales returns Journal - March 20.4 Date Details Fol Sales Returns Dr VAT Output Debtors Cr R 21 L Lion 50 7 57 L16 Purchases returns Journal - March 20.4 Calculate the vat. A debit note is to decrease Rundu Dealers credit in the Creditors account. In the Purchases Returns journal, Purchases returns R700, Vat input R98 and Creditors R798. Date Details Fol Purchases returns Cr VAT Input Creditors Dr R 30 T Tiger 700 98 798 L15

Exercise Required: 1 Record the above transactions in the following subsidiary journals, properly totalled, of Rundu Dealers for March 20.4 (a) Cash receipts journal (analysis columns for bank, sales, VAT Output, debtors, VAT Input (dr), discount allowed and sundries) (b) Cash payments journal (analysis columns for bank, purchases, creditors, discount received, VAT Input, VAT Output (cr) and sundries) (c) Sales journal (analysis columns for VAT Output, sales and debtors) (d) Purchases journal (analysis column for VAT Input, purchases and creditors) (e) Sales returns journal (analysis columns for VAT Output, sales returns and debtors) (f) Purchases returns journal (analysis columns for VAT Input, purchases returns and creditors) (g) General journal 2 Post the entries recorded above to the VAT Input and VAT Output accounts. Close off these accounts to the VAT Control account. Balance the VAT Control account at 31 March 20.4, the end of the business’ VAT period Post the entries recorded above to the VAT Input and VAT Output accounts. Close off these accounts to the VAT Control account. Balance the VAT Control account at 31 March 20.4, the end of the business’ VAT period

Exercise Trial Balance of Rundu Dealers as at 28 February 20.4 Dr Cr R Capital 177 150 Land and Buildings at cost 145 200 Equipment at cost 29 700 Inventory – 1 November 20.3 19 200 Bank 4 467 W Wolf 1 583 L Lion 770 T Tiger 2 310 VAT Input 2 715 VAT Output 2 925 Sales 86 400 Purchases 45 650 Distribution, admin and other expenses 20 500 268 785 268 785 The opening balances are in the Trial Balance, Vat Input R2 715 debit and Vat Output R 2 925 credit.

General Ledger Dr VAT Input L15 Cr Solution Date Detail Fol R Mar 1 Balance b/d 2 715 Mar 31 Creditors control PRJ2 98 31 Bank Debtors control Creditors control CPJ2 CRJ2PJ2 J2 1 120 21 1 785 84 VAT control 5 627 5 725 Vat Input R2 715 debit

General Ledger Dr VAT Output L16 Cr Dr VAT Control L17 Cr Solution Date Detail Fol R Mar 31 Debtors control SRJ2 7 Mar 1 Balance b/d 2 925 VAT control J2 6 131 31 Bank Creditors control CRJ2 SJ2 CPJ2 2 779 420 14 6 138 Dr VAT Control L17 Cr Vat Output R2 925 credit Date Detail Fol R Mar 31 VAT Input J2 5 627 VAT Output 6 131 Balance c/d 504 Apr 1 b/d

Rundu Dealers Cash Payments Journal - March 20.4 Exercise Date Details Fol Bank Cr Pur-chases Dr Credi- tors VAT Input VAT Output Settle-ment Dis-count received Sundry accounts R 5 T Tiger 2 196 2 310 (14) (100) 23 Cheetah 1 140 140 1 000 Carriage on purchases 29 Cash 5 746 Salaries and Wages B Bam 7 980 7 000 980 17 062 1 120 6 746 L15 Record the total Vat Input of R1 120 debit in the Cash Payments journal in the Vat Input account.

General Ledger Dr VAT Input L15 Cr Solution Date Detail Fol R Mar 1 Balance b/d 2 715 Mar 31 Creditors control PRJ2 98 31 Bank Debtors control Creditors control CPJ2 CRJ2PJ2 J2 1 120 21 1 785 84 VAT control 5 627 5 725 At the end of the month on the debit side of the Vat Input, Bank R1 120.

SettlementDiscount granted Exercise Rundu Dealers Cash Receipts Journal - March 20.4 Date Details Fol Bank Dr Sales Cr VAT Output Debtors VAT Input SettlementDiscount granted Sundry accounts R 1 15 504 13 600 1 904 7 W Wolf L Lion 1 469 713 1 583 (14*)# (7)# (100) (50) 14 O Old 285 6 840 6 000 35 840 770 250 Equip ment 24 811 19 600 2 779 2 353 (21) (150) L16 L15 Record the total Vat Input of R21 debit in the Cash Received journal in the Vat Input account.

General Ledger Dr VAT Input L15 Cr Solution Date Detail Fol R Mar 1 Balance b/d 2 715 Mar 31 Creditors control PRJ2 98 31 Bank Debtors control Creditors control CPJ2 CRJ2PJ2 J2 1 120 21 1 785 84 VAT control 5 627 5 725 At the end of the month on the debit side of the Vat Input, Debtors control R21.

Journals Sales Journal - March 20.4 Purchases Journal - March 20.4 Exercise Journals Sales Journal - March 20.4 Date Details Fol Sales Cr VAT Output Debtors Dr R 13 L Lion 2 000 280 2 280 W Wolf 1 000 140 1 140 3 000 420 3 420 L16 Purchases Journal - March 20.4 Record the total Vat Input of R1 785 debit in the Purchases journal in the Vat Input account. Date Details Fol Purchases Dr VAT Input Creditors Cr R 28 T Tiger 12 750 1 785 14 535 L15

General Ledger Dr VAT Input L15 Cr Solution Date Detail Fol R Mar 1 Balance b/d 2 715 Mar 31 Creditors control PRJ2 98 31 Bank Debtors control Creditors control CPJ2 CRJ2PJ2 J2 1 120 21 1 785 84 VAT control 5 627 5 725 At the end of the month on the debit side of the Vat Input, Creditors control R1 785.

Journals General Journal - March 20.4 Exercise Date Details Fol Total Debit Credit 12 Printing VAT Input Stationers Ltd/Creditors control Account received for printing L15 600 84 684 31 VAT Control Transfer of VAT Input to the VAT control account L17 5 627 VAT Output Transfer of VAT Output to the VAT control account L16 6 131 Record the Vat Input of R84 debit in the General journal in the Vat Input account.

General Ledger Dr VAT Input L15 Cr Solution Date Detail Fol R Mar 1 Balance b/d 2 715 Mar 31 Creditors control PRJ2 98 31 Bank Debtors control Creditors control CPJ2 CRJ2PJ2 J2 1 120 21 1 785 84 VAT control 5 627 5 725 On the end of the month on the debit side of the Vat Input, Creditors control R84.

Journals Sales returns Journal - March 20.4 Exercise Journals Sales returns Journal - March 20.4 Date Details Fol Sales Returns Dr VAT Output Debtors Cr R 21 L Lion 50 7 57 L16 Purchases returns Journal - March 20.4 Record the total Vat Input of R98 credit in the Purchases Returns journal in the Vat Input account. Date Details Fol Purchases returns Cr VAT Input Creditors Dr R 30 T Tiger 700 98 798 L15

General Ledger Dr VAT Input L15 Cr Solution Date Detail Fol R Mar 1 Balance b/d 2 715 Mar 31 Creditors control PRJ2 98 31 Bank Debtors control Creditors control CPJ2 CRJ2PJ2 J2 1 120 21 1 785 84 VAT control 5 627 5 725 At the end of the month on the credit side of the Vat Input, Creditors control R98.

General Ledger Dr VAT Input L15 Cr Solution Date Detail Fol R Mar 1 Balance b/d 2 715 Mar 31 Creditors control PRJ2 98 31 Bank Debtors control Creditors control CPJ2 CRJ2PJ2 J2 1 120 21 1 785 84 VAT control 5 627 5 725 If you take the total debits R5 725 of Vat Input and subtract the credits of R98 the balance is R5 627.

General Ledger Dr VAT Output L16 Cr Dr VAT Control L17 Cr Solution Date Detail Fol R Mar 31 Debtors control SRJ2 7 Mar 1 Balance b/d 2 925 VAT control J2 6 131 31 Bank Creditors control CRJ2 SJ2 CPJ2 2 779 420 14 6 138 Dr VAT Control L17 Cr Transfer the R5 627 to the VAT CONTROL account. Date Detail Fol R Mar 31 VAT Input J2 5 627 VAT Output 6 131 Balance c/d 504 Apr 1 b/d

Journals General Journal - March 20.4 Exercise Date Details Fol Total Debit Credit 12 Printing VAT Input Stationers Ltd/Creditors control Account received for printing L15 600 84 684 31 VAT Control Transfer of VAT Input to the VAT control account L17 5 627 VAT Output Transfer of VAT Output to the VAT control account L16 6 131 There is no paper on your table, like an invoice, to transfer the R5 627, use the general journal for this transaction.   Vat Control debit R5 627 Vat Input credit R5 627, narration Transfer of VAT Input to the VAT control account

SettlementDiscount granted Exercise Rundu Dealers Cash Receipts Journal - March 20.4 Date Details Fol Bank Dr Sales Cr VAT Output Debtors VAT Input SettlementDiscount granted Sundry accounts R 1 15 504 13 600 1 904 7 W Wolf L Lion 1 469 713 1 583 (14*)# (7)# (100) (50) 14 O Old 285 6 840 6 000 35 840 770 250 Equip ment 24 811 19 600 2 779 2 353 (21) (150) L16 L15 Record the total Vat Output of R2 779 credit in the Cash Receipts journal in the Vat Output account.  

General Ledger Dr VAT Output L16 Cr Dr VAT Control L17 Cr Solution Date Detail Fol R Mar 31 Debtors control SRJ2 7 Mar 1 Balance b/d 2 925 VAT control J2 6 131 31 Bank Creditors control CRJ2 SJ2 CPJ2 2 779 420 14 6 138 Dr VAT Control L17 Cr At the end of the month on the credit side of the Vat Output, Bank R2 779. Date Detail Fol R Mar 31 VAT Input J2 5 627 VAT Output 6 131 Balance c/d 504 Apr 1 b/d

Journals Sales Journal - March 20.4 Purchases Journal - March 20.4 Exercise Journals Sales Journal - March 20.4 Date Details Fol Sales Cr VAT Output Debtors Dr R 13 L Lion 2 000 280 2 280 W Wolf 1 000 140 1 140 3 000 420 3 420 L16 Purchases Journal - March 20.4 Record the total Vat Output of R420 credit in the Sales journal in the Vat Output account. Date Details Fol Purchases Dr VAT Input Creditors Cr R 28 T Tiger 12 750 1 785 14 535 L15

General Ledger Dr VAT Output L16 Cr Dr VAT Control L17 Cr Solution Date Detail Fol R Mar 31 Debtors control SRJ2 7 Mar 1 Balance b/d 2 925 VAT control J2 6 131 31 Bank Creditors control CRJ2 SJ2 CPJ2 2 779 420 14 6 138 Dr VAT Control L17 Cr At the end of the month on the credit side of the Vat Output, Debtors control R420. Date Detail Fol R Mar 31 VAT Input J2 5 627 VAT Output 6 131 Balance c/d 504 Apr 1 b/d

Rundu Dealers Cash Payments Journal - March 20.4 Exercise Date Details Fol Bank Cr Pur-chases Dr Credi- tors VAT Input VAT Output Settle-ment Dis-count received Sundry accounts R 5 T Tiger 2 196 2 310 (14) (100) 23 Cheetah 1 140 140 1 000 Carriage on purchases 29 Cash 5 746 Salaries and Wages B Bam 7 980 7 000 980 17 062 1 120 6 746 L15 Record the total Vat Output of R14 credit in the Cash Payments journal in the Vat Output account.

General Ledger Dr VAT Output L16 Cr Dr VAT Control L17 Cr Solution Date Detail Fol R Mar 31 Debtors control SRJ2 7 Mar 1 Balance b/d 2 925 VAT control J2 6 131 31 Bank Creditors control CRJ2 SJ2 CPJ2 2 779 420 14 6 138 Dr VAT Control L17 Cr At the end of the month on the credit side of the Vat Output, Creditors control R14. Date Detail Fol R Mar 31 VAT Input J2 5 627 VAT Output 6 131 Balance c/d 504 Apr 1 b/d

Journals Sales returns Journal - March 20.4 Exercise Journals Sales returns Journal - March 20.4 Date Details Fol Sales Returns Dr VAT Output Debtors Cr R 21 L Lion 50 7 57 L16 Purchases returns Journal - March 20.4 Record the total Vat Output of R7 debit in the Sales Returns journal in the Vat Output account. Date Details Fol Purchases returns Cr VAT Input Creditors Dr R 30 T Tiger 700 98 798 L15

General Ledger Dr VAT Output L16 Cr Dr VAT Control L17 Cr Solution Date Detail Fol R Mar 31 Debtors control SRJ2 7 Mar 1 Balance b/d 2 925 VAT control J2 6 131 31 Bank Creditors control CRJ2 SJ2 CPJ2 2 779 420 14 6 138 Dr VAT Control L17 Cr At the end of the month on the debit side of the Vat Output, Debtors control R7. Date Detail Fol R Mar 31 VAT Input J2 5 627 VAT Output 6 131 Balance c/d 504 Apr 1 b/d

General Ledger Dr VAT Output L16 Cr Dr VAT Control L17 Cr Solution Date Detail Fol R Mar 31 Debtors control SRJ2 7 Mar 1 Balance b/d 2 925 VAT control J2 6 131 31 Bank Creditors control CRJ2 SJ2 CPJ2 2 779 420 14 6 138 Dr VAT Control L17 Cr If you take the total credits R6 138 of Vat Output and subtract the debits of R7 the balance is R6 131. Date Detail Fol R Mar 31 VAT Input J2 5 627 VAT Output 6 131 Balance c/d 504 Apr 1 b/d

General Ledger Dr VAT Output L16 Cr Dr VAT Control L17 Cr Solution Date Detail Fol R Mar 31 Debtors control SRJ2 7 Mar 1 Balance b/d 2 925 VAT control J2 6 131 31 Bank Creditors control CRJ2 SJ2 CPJ2 2 779 420 14 6 138 Dr VAT Control L17 Cr Transfer the R6 131 to the VAT CONTROL account. Date Detail Fol R Mar 31 VAT Input J2 5 627 VAT Output 6 131 Balance c/d 504 Apr 1 b/d

Journals General Journal - March 20.4 Exercise Date Details Fol Total Debit Credit 12 Printing VAT Input Stationers Ltd/Creditors control Account received for printing L15 600 84 684 31 VAT Control Transfer of VAT Input to the VAT control account L17 5 627 VAT Output Transfer of VAT Output to the VAT control account L16 6 131 There is no paper on your table, like an invoice, to transfer the R6 131, use the general journal for this transaction.   Vat Output debit R6 131 Vat control credit R6 131 Transfer of VAT Output to the VAT control account

General Ledger Dr VAT Output L16 Cr Dr VAT Control L17 Cr Solution Date Detail Fol R Mar 31 Debtors control SRJ2 7 Mar 1 Balance b/d 2 925 VAT control J2 6 131 31 Bank Creditors control CRJ2 SJ2 CPJ2 2 779 420 14 6 138 Dr VAT Control L17 Cr Balance the Vat Control account and if the balance is a Credit it means SARS is your creditor and you must pay, like in this case. A cheque must be issued to SARS for this amount before the 25 April 20.4 Date Detail Fol R Mar 31 VAT Input J2 5 627 VAT Output 6 131 Balance c/d 504 Apr 1 b/d