VAT CFAB Chapter 4

At 1 December 2018, Laurel owes the authorities £23,778. During the month of December, she recorded the following transactions:

Sales of £800,000 exclusive of 17.5% value added tax.

Purchases of £590,790 inclusive of value added tax.

What is the balance on Laurel's value added tax account at the end of December?

• £54,937

• £60,389

• £75,788

• £163,778

A business sold goods that had a net value of £600 to Lucid. What entries are required to record this transaction if value added tax is payable at 17.5%?

• Dr Lucid £600, Dr Value added tax £105, Cr Sales £705

• Dr Lucid £705, Cr Value added tax £105, Cr Sales £600

• Dr Lucid £600, Dr Value added tax £105, Cr Sales £600

• Dr Sales £600, Dr Value added tax £105, Cr Lucid £705

The following information relates to Eva Co's value added tax for the month of March 2018:

Sales (including value added tax) 109,250

Purchased (net of value added tax) 64,000

value added tax is charged at a rate of 15%. Eva Co's value added tax account showed an opening credit balance of £4,540 at the beginning of the month and a closing debit balance of £2,720 at the end of the month.

What was the total value added tax paid to regulatory authorities during the month of March 2018?

• £6470

• £11,910

• £14,047.50

• £13,162.17

Melissa is not registered for value added tax purposes. She has recently received an invoice for goods resale which cost £500 before value added tax, which is levied at 15%. The total value was therefore £575.

What is the correct entry to be made in Melissa's general ledger in respect of the invoice?

• Dr Purchases £500, Dr Value added tax £75, Cr Payables £575

• Dr Purchases £575, Dr Value added tax £75, Cr Payables £500

• Dr Purchases £500, Cr Payables £500

• Dr Purchases £575 Cr Payables £575

The following transactions took place during Alan's first month of trading:

(i) Credit sales of £121,000 exclusive of value added tax

(ii) Credit purchases of £1571,110 inclusive of value added tax

(iii) Cash payments to credit suppliers of £82,710 inclusive of value added tax

Value added tax is 20%

What is the balance on Alan's value added tax control account at the end of his month of trading?

• £1,985 DR

• £1,985 CR

• £15,770 DR

• £15,770 CR

The value added tax account in Atomic Ltd's nominal ledger currently shows output tax and input tax for the quarter at £228,816 and £176,949 respectively. A detailed review of the account highlights the following matters:

(1) £8,301 of value added tax on invoices received has been posted to output tax

(2) value added tax of £3,606 on sales has been posted to the debit of the value added tax account

The correct amount payable to the authorities is

• £47,172

• £35,265

• £59,079

• £42,477

Plym plc is a retailer which is registered for value added tax. All sales, and all purchases of goods for resale, attract value added tax at the rate of 20%. For the year to 30 June 2018, Plym plc paid £69,600 to suppliers in respect of goods for resale and showed revenue in SOPL of £89,400. There is no change in the figures for inventory and trade payables in the SOFP at 30 June 2017 and 30 June 2018.

WHat was Plym plc gross profit for the year ended 30 June 2018.

• £19,800

• £4,900

• £31,400

• £16,500