1. Value Added Tax (VAT)

2. 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.

3. Case(2): The following are some information for Hadara Company, and tax registration number 563105114 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.

4. 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 232. 5- On 31/12 the company return 2 fridges to Naser company and get sales return invoice number 6.

5. Sales: Sales: 1- On 3/12 sold 3 fridges with total value 12600. 2- 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.

6. Required: 1-Prepare the statement of sales and purchase for 12/2006. 2-Prepare the journal entries for the transactions that occurred on 12/2006. 3- Determine the VAT to be paid or refund, and prepare the related entries.

7. Date Invoice no DetailsTaxBaseTotal 3/1264Purchase217515,00017,175 7/12257Purchase2,421.516,70019, 121.5 16/12346Purchase254.541,755.462,010 31/12 6 Purchase return -870-6000-6,870 Total3981.0427,455.4631,436.5  Purchase statement :

8. DateInvoice #Cr.Dr.Entry 15,0001- Purchase 3/1264 2175 VAT 17,175 Naser co. 16,7002- Purchase 7/12257 2421.5 VAT 19,121.5 Cash 1755.463- Purchase 16/12346 254.54 VAT 2010 Bank 202.624- Phone 31/12791 29.38 VAT 232 Cash 31/12 68705- Naser co. 870 VAT 6000Purchase. return Purchase entries:

9. DateInvoiceDetailsTaxBaseTotal 3/12351Sales1595.6311,004.3712,600 15/12352Sales2583.4017816.6020,400 23/12353Sales110.20760870.20 Total4289.2329,580.9733,870.20  Sales statement:

10. Invoice #Cr.Dr.Entry 351 126001- Cash 1595.63 Vat 11,004.37 Sales 352 204002- Bank 2583.40 Vat 17816.60 Sales 353 870.203- Bank 110.20 Vat 760 Sales Sales entries:

11. The adjusting entry for preparing financial statement 12/2006 is: VAT 308.19 Accrued VAT 308.19 According to the tax law (VAT must be paid before 15/1/2007) The entry of : Accrued VAT 308.19 Cash 308.19 VAT = In tax – out tax = 4289.23– 3981.04 = 308.19