A physical stock take was done on 28 February 2021 and there were 26 transformers on hand, excluding the two damaged transformers that were returned by the client. After thorough investigation it was found that the two damaged transformers cannot be sold to any entity QUESTION 3 30 MARKS Mpho Malatsi is the owner of Tiger King. (Tiger), a sole proprietorship, whose main trading activity is the buying and selling of toddlers' educational toys and books. Mpho started the business ten years ago, when she had her first child, and it grew significantly over time to such an extent that she had to register the business for value-added tax (VAT) in 2015. A VAT rate of 15% is applicable and the financial year end of the business is 28/29 February The accounting policy of Tiger stipulates the following Inventory is maintained on the perpetual basis and the first-in-first-out method of inventory valuation is applied Sales prices of goods are determined by applying a gross profit percentage of 50% to the cost price of goods. Depreciation on the delivery vehicles is written off based on the kilometres travelled per annum with no estimated residual values. It was decided that vehicles will be sold when a vehicle has travelled 300 000 km Sales transactions for the period 1 March 2020 to 28 February 2021: QUESTION 2 25 MARKS Transformers SA (Pty) Ltd. ('Transformers SA'), is in the business of supplying transformers to electricity providers in the country. Transformers SA was registered as a company during 2012 and its main clients are municipalities and Eskom. Transformers SA decided on a financial year end of 28/29 February and is not a registered value-added tax (VAT) vendor The applicable VAT rate is 15% Transformers SA adopted the periodic inventory system and applies the first-in-first-out method of inventory valuation. Inventory on hand on 1 March 2020 consisted of five transformers with a total cost of R39 500 Sales for the financial year ended 28 February 2021, before returns were taken into account. amounted to R905 464 The following transactions were done during the financial year ended 28 February 2021: 13 March 2020 Bought 20 transformers from a supplier in the United Kingdom. An amount of R131 500 was paid to the supplier and R15 000 was paid to the South African Revenue Services (SARS) for customs duty. The tax invoice issued for the transport costs to deliver the goods at the premises of Transformers SA amounted to R17 500 and storage costs to the amount of R5 000 were paid to a non-VAT vendor. All these costs were settled by means of electronic bank transfers 30 June 2020 Bought 60 transformers on credit from a South African supplier. A trade discount of 2% was negotiated and an invoice amounting to R488 000 (VAT inclusive) was received with the delivery of the goods. The supplier offered a further 6% settlement discount and Transformers SA settled the outstanding invoice in time to make use of it Transport cost to the amount of R36 000 and storage cost to the amount of Rs 500 were paid to these two VAT vendors by means of electronic bank transfers. 15 September 2020 Two of the transformers bought on 30 June 2020 were sent back to the supplier after payment was already made. The supplier refunded Transformers SA by ways of an electronic transfer 18 November 2020 Bought 25 transformers from a South African supplier for R207 500 (inclusive of VAT), being the amount before any trade discounts. The supplier offered a trade discount of 3%. The supplier was responsible for paying the delivery cost of R36 000 inclusive of VAT Additional information: During the financial year, 77 transformers were sold (before any returns) to various entities in South Africa. Two of these transformers which were sold on 5 February 2021 were damaged when transported to the client. The client returned the two units to Transformers SA on 7 February 2021 and after a credit note of R19 520 was issued, they were refunded via an electronic transfer of funds. The transport cost to and from the client amounted to R8 900 (inclusive of VAT) and was paid by Transformers SA. This was the only credit note issued by the entity during the financial year. . . According to the debtors' journal, credit sales invoices for the period under review amounted to R14 777 500. The amounts received from the debtors for the financial year totalled R12 930 000 according to the bank column in the cash receipts journal. All payments done by debtors were done within the settlement period of ten days According to the debtors' allowances journal, the value of credit notes issued to customers, during the financial year under review, amounted to R964 000.90% of these credit notes were issued within five days after delivery took place. The remaining 10% of credit notes were issued to debtors who returned the goods after they have settled the original invoice in full, within the 10 days settlement period. No cash sales customer has returned any inventory item during the year under review Cash sales for the period under review according to sales column in the cashbook receipts journal amounted to R6 780 000.X Cast of saks VAT Iuente The owner of Izinto took stationery with the selling price of R2 381 for his personal use. This transaction still needs to be recorded in the books. . . Outstanding debtors' balances written off as credit losses during the financial year amounted to R3 220. R5 750 was received during the year for outstanding debt written off in previous financial years. An allowance for credit losses of R3 435 was created on the outstanding debtors balance of R52 670 on 29 February 2020. It was decided to maintain the same allowance for credit losses percentage on the outstanding deblors' balance of R356 500 as at 28 February 2021 . A physical stock take was done on 28 February 2021 and there were 26 transformers on hand, excluding the two damaged transformers that were returned by the client. After thorough investigation it was found that the two damaged transformers cannot be sold to any entity QUESTION 3 30 MARKS Mpho Malatsi is the owner of Tiger King. (Tiger), a sole proprietorship, whose main trading activity is the buying and selling of toddlers' educational toys and books. Mpho started the business ten years ago, when she had her first child, and it grew significantly over time to such an extent that she had to register the business for value-added tax (VAT) in 2015. A VAT rate of 15% is applicable and the financial year end of the business is 28/29 February The accounting policy of Tiger stipulates the following Inventory is maintained on the perpetual basis and the first-in-first-out method of inventory valuation is applied Sales prices of goods are determined by applying a gross profit percentage of 50% to the cost price of goods. Depreciation on the delivery vehicles is written off based on the kilometres travelled per annum with no estimated residual values. It was decided that vehicles will be sold when a vehicle has travelled 300 000 km Sales transactions for the period 1 March 2020 to 28 February 2021: QUESTION 2 25 MARKS Transformers SA (Pty) Ltd. ('Transformers SA'), is in the business of supplying transformers to electricity providers in the country. Transformers SA was registered as a company during 2012 and its main clients are municipalities and Eskom. Transformers SA decided on a financial year end of 28/29 February and is not a registered value-added tax (VAT) vendor The applicable VAT rate is 15% Transformers SA adopted the periodic inventory system and applies the first-in-first-out method of inventory valuation. Inventory on hand on 1 March 2020 consisted of five transformers with a total cost of R39 500 Sales for the financial year ended 28 February 2021, before returns were taken into account. amounted to R905 464 The following transactions were done during the financial year ended 28 February 2021: 13 March 2020 Bought 20 transformers from a supplier in the United Kingdom. An amount of R131 500 was paid to the supplier and R15 000 was paid to the South African Revenue Services (SARS) for customs duty. The tax invoice issued for the transport costs to deliver the goods at the premises of Transformers SA amounted to R17 500 and storage costs to the amount of R5 000 were paid to a non-VAT vendor. All these costs were settled by means of electronic bank transfers 30 June 2020 Bought 60 transformers on credit from a South African supplier. A trade discount of 2% was negotiated and an invoice amounting to R488 000 (VAT inclusive) was received with the delivery of the goods. The supplier offered a further 6% settlement discount and Transformers SA settled the outstanding invoice in time to make use of it Transport cost to the amount of R36 000 and storage cost to the amount of Rs 500 were paid to these two VAT vendors by means of electronic bank transfers. 15 September 2020 Two of the transformers bought on 30 June 2020 were sent back to the supplier after payment was already made. The supplier refunded Transformers SA by ways of an electronic transfer 18 November 2020 Bought 25 transformers from a South African supplier for R207 500 (inclusive of VAT), being the amount before any trade discounts. The supplier offered a trade discount of 3%. The supplier was responsible for paying the delivery cost of R36 000 inclusive of VAT Additional information: During the financial year, 77 transformers were sold (before any returns) to various entities in South Africa. Two of these transformers which were sold on 5 February 2021 were damaged when transported to the client. The client returned the two units to Transformers SA on 7 February 2021 and after a credit note of R19 520 was issued, they were refunded via an electronic transfer of funds. The transport cost to and from the client amounted to R8 900 (inclusive of VAT) and was paid by Transformers SA. This was the only credit note issued by the entity during the financial year. . . According to the debtors' journal, credit sales invoices for the period under review amounted to R14 777 500. The amounts received from the debtors for the financial year totalled R12 930 000 according to the bank column in the cash receipts journal. All payments done by debtors were done within the settlement period of ten days According to the debtors' allowances journal, the value of credit notes issued to customers, during the financial year under review, amounted to R964 000.90% of these credit notes were issued within five days after delivery took place. The remaining 10% of credit notes were issued to debtors who returned the goods after they have settled the original invoice in full, within the 10 days settlement period. No cash sales customer has returned any inventory item during the year under review Cash sales for the period under review according to sales column in the cashbook receipts journal amounted to R6 780 000.X Cast of saks VAT Iuente The owner of Izinto took stationery with the selling price of R2 381 for his personal use. This transaction still needs to be recorded in the books. . . Outstanding debtors' balances written off as credit losses during the financial year amounted to R3 220. R5 750 was received during the year for outstanding debt written off in previous financial years. An allowance for credit losses of R3 435 was created on the outstanding debtors balance of R52 670 on 29 February 2020. It was decided to maintain the same allowance for credit losses percentage on the outstanding deblors' balance of R356 500 as at 28 February 2021