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QUESTION 1 [ 3 8 MARKS ] [ 6 9 MINUTES ] IGNORE TAXATION & VAT Hold Ltd is a South African company operating in
QUESTION
MARKS
MINUTES
IGNORE TAXATION & VAT
Hold Ltd is a South African company operating in the construction industry. Hold Ltd
is listed on the JSE Ltd and has been a key player in the construction industry since
Hold Ltd has a December yearend.
In January the board members of Hold Ltd decided to expand their business
and identified that in order to fund this expansion, they will need to obtain a foreign
loan as the interest rates are better suited for the needs of the company and they will
have to purchase inventory from a foreign supplier, who has better quality inventory,
as their market research has identified that better quality inventory will address the
needs of their customers. Hold Ltd entered into the following foreign transactions:
Transaction
On January Hold Ltd obtained a loan of $ at a marketrelated interest
rate of per annum. Hold Ltd is required to make a repayment of $ annually
in arrears with the first payment due on December
Transaction
On September Hold Ltd placed an order amounting to $ to purchase
inventory from a supplier in the USA. The inventory was shipped free on board, at the
agreed port of departure. The inventory was delivered to the Port NewarkElizabeth
Marine Terminal, New Jersey USA on September which is the agreed port
of departure. The inventory was loaded on the ship on September but the
ship only departed to South Africa on October
The total amount owing was paid on January of the inventory was still on
hand by December and its estimated net residual value was R
End of Question
tableThe following exchange rates apply:,US$ R January September December January December Average January December Average January December
tableREQUIREDMARKStableSubtotalTotalatablePrepare the journal entries to account for the foreign loan inthe accounting records of Hold Ltd for the years ended December and December Only preparethe interest table for the years required by the question.Dates and narrations are required.btablePrepare the journal entries to account for the inventorypurchased from the supplier in the USA in the accountingrecords of Hold Ltd for the years ended December and December TOTAL,,
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