Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PART A Buffalo (Pty) Ltd manufactures a variety of African beers. The company has provided you with the following background in respect of the enterprise:

PART A Buffalo (Pty) Ltd manufactures a variety of African beers. The company has provided you with the following background in respect of the enterprise: Its manufacturing activities have been approved by SARS as a qualifying process of manufacture. The company is not a small business corporation as defined in the IncomeTax Act, 1962 (Act 58 of 1962), as amended. Its financial year ends on the last day of February. Buffalo is a registered VAT vendor making only taxable supplies. Where needed, Buffalo obtained valid tax invoices and the required documentation for all its transactions. All amounts exclude VAT where applicable, unless specifically stated otherwise. The companys gross profit and other income, before other expenses is presented as follows: Extract of statement of profit or loss and other comprehensive income for the year ended 28 February 2022: Notes R Sales 1 9 750 000 Cost of sales 2 (4 029 570) Gross profit 5 720 430 Other income 50 000 Interest received 3 50 000 Total income 5 777 430 Notes: 1. 5% of the sales amount reflected above, were returned. The adjustment for these returns has been made to the cost of sales account only, in the statement presented above. 2. Cost of sales, all at cost price, was determined as follows: R Opening stock 1 719 280 Add: Purchases 5 626 000 Less: Closing stock (3 315 710) 4 029 570 The market value for the opening stock was R1 650 000 on 1 March 2021 and the market value for the closing stock was R3 400 000 on 28 February 2022. 3. Interest was received from a fixed deposit with Afreak Bank (a local South African Bank). REQUIRED PART A MARKS Make the appropriate adjustments to each the amounts provided in the extracted statement (and notes hereto) above to determine the amount ultimately to be included in taxable income. Also indicate, where no adjustments are required, or amounts are exempt. 6

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Solve the following 1,4 3 2TT 5x- 1+ (15 x) dx 5X

Answered: 1 week ago