QUESTION 1 (30 marks) 1.1. Menlyn Mowbray trades as a sporting coach. She coaches children to play various sports at the (30) premises of a number of schools. She employs a number of talented sportsmen to assist the coaching of the children. She trades as a sole proprietor. She is registered for value-added tax on the invoice basis. She is a resident of the Republic. After a recent query regarding her value-added tax affairs from the local SARS office, Menlyn Mowbray has requested your assistance in completing her value-added tax return for the two- month tax return period 1 June 2020 to 31 July 2020. An analysis of Menlyn Mowbray's income and expenditure for her two-month tax period ending 31 July 2020 is set out below. Unless otherwise stated, all amounts are inclusive of value-added tax when applicable. Income 319 200 29 640 Fees charged to pupils Sale of second-hand sporting equipment Interest on current account Indemnity award received (note 1) Achievement award (note 2) 2 565 5 130 28 500 13 110 912 14 250 313 500 Expenditure Bad debts (note 3) Bank Charges Computer (note 4) Double-cab motor car (note 4) Depreciation (note 4) Insurance (note 5) Petrol for the double-cab motor car Printing and stationery Purchases of second-hand sporting equipment (note 6) 6 372 1 539 2 793 1 653 33 630 Salaries 61 560 Refreshments (note 7) 1 368 Notes: 1. The indemnity award of R5 130 was received for two bags of sporting equipment that was stolen from a school during May 2020. 2. 3. . . 4. Menlyn Mowbray was voted Coach of the Year' by the provincial swimming union. She was awarded R28 500 for this achievement. Bad debts written-off of R13 110 comprises of the following: R10 260 owing by a long-standing customer of Menlyn Mowbray (a parent of three children who had all been coached by Menlyn Mowbray) for outstanding fees. This customer has since emigrated, and Menlyn Mowbray has been unable to trace him. R2 850 was lent to an employee who left the province without repaying the loan. Depreciation of R6 372 (for the two-month tax period) is charged on the following assets owned by Menlyn Mowbray: New sports equipment that was purchased in a previous tax period for R27 360 (24 000 plus value-added tax of R3 360) - depreciation amounts to R800. Computer that was purchased on 1 July 2020 for R14 250 (12 500 plus value added tax of R1 750) - depreciation is R347. A double-cab motor car that was purchased on 1 July for R313 500 (275 000 plus value- added tax of R38 500). Menlyn Mowbray has the sole use of this double-cab motor car. (Menlyn Mowbray maintains accurate records of her travelling and is able to prove that her business travelling is 40% of her total travelling.) - depreciation is R5 225. Insurance premiums of R1 539 were incurred for the following: Sporting equipment - R456 . . 5. Computer - R228 . Double-cab motor car - R855 6. 3/4 Purchases of second-hand sporting equipment is made up as follows: Second-hand sport equipment from registered vendors - R17 100 Second-hand sport equipment from non-registered vendors - R16 530 Menlyn Mowbray purchases second-hand sport equipment from both registered and non- registered vendors. Due to the limited lifespan of this second-hand sport equipment, she treats the purchases of these items as an expense. The Commissioner allows her to deduct these purchases in the determination of her taxable income as an expense under the general deduction formula, in other words, these items are not regarded as being of a capital nature. Refreshments costing R1 368 are energy drinks provided to her assistant coaches (her employees). 7. You are required to determine the net value-added tax due to, or from the Commissioner, for Menlyn Mowbray two-month tax period ended 31 July 2020. Furthermore, distinguish between output tax and input tax.