QUESTION 2 (17 marks)

You are given the following transactions of Sela Shangombe, a sole trader who repairs stoves in Oshakati. Sela is a registered VAT vendor and the transactions below occurred in April 2019. Sela uses the perpetual system to account for inventory. Assume a standard VAT rate of 15%.

i) Bought spare parts to perform repairs for cash from Speedy spares for NS 230 (including VAT).

ii) Repaired a stove for a customer for the amount of NS 1 000 excluding VAT. The customer is not registered for VAT. The customer paid via EFT for the repair.

iii) Sela met another businessman who was able to source the spare parts for the stoves from overseas at a very low cost. Sela paid NS 300 from petty cash (VAT inclusive) for the lunch of this business meeting. iv) Paid salaries to staff NS 18 000 via Electronic Funds Transfer (EFT).

v) Bought spare parts from a non-registered vendor for NS 800 (VAT exclusive) on credit.

vi) Sela filled up the business vehicle with petrol for an amount of NS 500, from petty cash.

Required:

(1) a) Prepare the general journal entries for the above transactions. If no VAT is applicable, state why it is not applicable.

(2) b) Provide the input and output VAT for the above transactions as it would appear on Selas VAT return.

(2) c) How much VAT is due to or receivable from the receiver of revenue? (3)