Value Added Tax (VAT). Note Note 1- The amount shall be paid if the total Sales VAT is greater than the sum of the purchase VAT. 2- The amount of the.

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Presentation transcript:

Value Added Tax (VAT)

Note Note 1- The amount shall be paid if the total Sales VAT is greater than the sum of the purchase VAT. 2- The amount of the return if the total Sales VAT is less than the sum of the purchase. Amount to pay  the difference between vat of sales and vat of purchase.

Case(2): The following are some information for Hadara Company, and tax registration number for 12/2006: Purchases : 1- On 3/12 purchased 5 fridges amounted 3000 per unit and not include VAT, from Naser Company invoice number 64 on credit. 2- On 7/12 purchased 5 TVs 16« with price 1300 per unit, and 6 TVs 20« with price 1700 per unit and the price not include VAT, invoice number 257.

3- On 16/12 purchased 10 fans with price 105 per unit include VAT and 8 heaters with price 120 per unit include VAT from Sharaf Company invoice number 346 with cheque. 4- On 31/12 paid Paltel expense invoice number 791 with total amount On 31/12 the company return 2 fridges to Naser company and get sales return invoice number 6.

Sales: Sales: 1- On 3/12 sold 3 fridges with total value On 15/12 sold 4 SONY TVs 16« with price 1800 per unit includes VAT and 6 TVs 20« with price 2200 per unit include VAT with cheque. 3- On 23/12 sold 8 fans with price 760 for the basic value by cheque. Note : The NIS is the currency used.

Required: 1-Prepare the statement of sales and purchase for 12/ Prepare the journal entries for the transactions that occurred on 12/ Determine the VAT to be paid or refund, and prepare the related entries.

Date Invoice no DetailsTaxBaseTotal 3/1264Purchase217515,00017,175 7/12257Purchase2, ,70019, /12346Purchase , ,010 31/12 6 Purchase return ,870 Total , ,436.5  Purchase statement :

DateInvoice #Cr.Dr.Entry 15,0001- Purchase 3/ VAT 17,175 Naser co. 16,7002- Purchase 7/ VAT 19,121.5 Cash Purchase 16/ VAT 2010 Bank Phone 31/ VAT 232 Cash 31/ Naser co. 870 VAT 6000Purchase. return Purchase entries:

DateInvoiceDetailsTaxBaseTotal 3/12351Sales , ,600 15/12352Sales ,400 23/12353Sales Total , ,  Sales statement:

Invoice #Cr.Dr.Entry Cash Vat 11, Sales Bank Vat Sales Bank Vat 760 Sales Sales entries:

The adjusting entry for preparing financial statement 12/2006 is: VAT Accrued VAT According to the tax law (VAT must be paid before 15/1/2007) The entry of : Accrued VAT Cash VAT = In tax – out tax = – =