PowerUp (Pty) Limited (PowerUp), a company that manufactures and sells high 1 quality generators, is a registered value added tax vendor and makes 97 taxable supplies You are the Audit Manager in charge of the audit of PowerUp Your Audit Clerk has queried the accuracy of the value added tax treatment of the following journal entries in PowerUps accounting records for the year of assessment which ended 28 February 2023 PowerUp purchased a 20 seater minibus for R718 750 (including VAT at 15 ) to transport employees to and from work on a daily basis Journal entry Dr Motor vehicles R718750 Cr Creditors R718750 This debtor with an outstanding debt of R24 150 (including VAT at 15 ) has gone into liquidation The R24 150 outstanding debt represents the original credit sale of R16 250 and interest of R7 900 levied by PowerUp on the overdue amount Journal entry Dr Bad Debts R21000 Dr VAT R3150 Cr Debtors R24150 Employees are entitled to purchase generators (trading stock) at its manufactured cost A generator with a cost price of R14 950 (VAT included at 15 ) was sold to an employee Journal entry Dr Bank R14950 Cr Sales R14950 PowerUps insurer paid out R56 925 for a claim relating to damage caused to PowerUps warehouse when an explosion occurred Journal entry Dr Bank R56925 Cr Insurance award R56925 Because of the remote location of PowerUps factory, many employees remain on PowerUps premises during their lunch break and entertain themselves in the employees canteen PowerUp, therefore, decided to purchase a pool table for the canteen Journal entry Dr Employees subsistence R9500 Dr VAT R1425 Cr Bank R10 925 The employee did not have cash available to pay for his university fees (he is studying part time) and requested that PowerUp pay the university on his behalf In return, he would waive his right to his annual salary increase Journal entry Dr Salaries R32500 Dr VAT R4875 Cr Bank R37375 PowerUp settled an employees debt of R8 970 (including VAT at 15 ), being a Seventh Schedule fringe benefit Journal entry Dr Salaries R1170 Dr VAT R1170 PowerUp also sells generators to customers in America in order to enlarge the companys global footprint The total American sales translated to R32 200 Journal entry Dr Foreign Debtor R32200 Cr Sales R28000 Cr VAT R4200 PowerUp hosted a team building event The following costs, VAT inclusive, were incurred Purchases of refreshments R12 650 Purchases of fruit and vegetables R3 450 Journal entry Dr Staff Refreshments R12650 Cr Staff Fruit Veg R3450 Cr Bank R16100 PowerUp donated a generator to a Public Benefit Organisation (PBO) for a fund raising event The PBO issued a valid s18A certificate for the donation The market value of the generator was R15 000 and the cost was R13 000 Journal entry Dr Donations R13000 Cr VAT R1950 Cr Trading Stock R14950 Briefly comment on whether the VAT treatment of each journal (1 10) is correct or not If the VAT treatment is incorrect, calculate the correct VAT amount

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PowerUp (Pty) Limited (PowerUp), a company that manufactures and sells high[1]quality generators, is a registered value-added tax vendor and makes 97% taxable supplies. You are

PowerUp (Pty) Limited (PowerUp), a company that manufactures and sells high[1]quality generators, is a registered value-added tax vendor and makes 97% taxable supplies. You are the Audit Manager in charge of the audit of PowerUp. Your Audit Clerk has queried the accuracy of the value-added tax treatment of the following journal entries in PowerUps accounting records for the year of assessment which ended 28 February 2023:

PowerUp purchased a 20-seater minibus for R718 750 (including VAT at 15%) to transport employees to and from work on a daily basis.

Journal entry: Dr Motor vehicles R718750

Cr Creditors R718750

This debtor with an outstanding debt of R24 150 (including VAT at 15%) has gone into liquidation. The R24 150 outstanding debt represents the original credit sale of R16 250 and interest of R7 900 levied by PowerUp on the overdue amount.

Journal entry: Dr Bad Debts R21000

Dr VAT R3150

Cr Debtors R24150

Employees are entitled to purchase generators (trading stock) at its manufactured cost. A generator with a cost price of R14 950 (VAT included at 15%) was sold to an employee.

Journal entry: Dr Bank R14950

Cr Sales R14950

PowerUps insurer paid out R56 925 for a claim relating to damage caused to PowerUps warehouse when an explosion occurred.

Journal entry: Dr Bank R56925

Cr Insurance award R56925

Because of the remote location of PowerUps factory, many employees remain on PowerUps premises during their lunch break and entertain themselves in the employees canteen. PowerUp, therefore, decided to purchase a pool table for the canteen.

Journal entry: Dr Employees subsistence R9500

Dr VAT R1425

Cr Bank R10 925

The employee did not have cash available to pay for his university fees (he is studying part-time) and requested that PowerUp pay the university on his behalf. In return, he would waive his right to his annual salary increase.

Journal entry: Dr Salaries R32500

Dr VAT R4875

Cr Bank R37375

PowerUp settled an employees debt of R8 970 (including VAT at 15%), being a Seventh Schedule fringe benefit.

Journal entry: Dr Salaries R1170

Dr VAT R1170

PowerUp also sells generators to customers in America in order to enlarge the companys global footprint. The total American sales translated to R32 200.

Journal entry: Dr Foreign Debtor R32200

Cr Sales R28000

Cr VAT R4200

PowerUp hosted a team-building event.

The following costs, VAT inclusive, were incurred:

- Purchases of refreshments R12 650

- Purchases of fruit and vegetables R3 450

Journal entry: Dr Staff Refreshments R12650

Cr Staff Fruit & Veg R3450

Cr Bank R16100

PowerUp donated a generator to a Public Benefit Organisation (PBO) for a fund-raising event. The PBO issued a valid s18A certificate for the donation. The market value of the generator was R15 000 and the cost was R13 000.

Journal entry: Dr Donations R13000

Cr VAT R1950

Cr Trading Stock R14950

Briefly comment on whether the VAT treatment of each journal (1-10) is correct or not. If the VAT treatment is incorrect, calculate the correct VAT amount.