Question 2 20 Marks Mulisa Entity's main business is the production of raw materials (unprocessed milk) into finished products (processed milk). The business has been operating since March 2020. Mulisa Entity is not a registered VAT vendor with SARS. In the past two financial years (2021 and 2022), it has been making R800 000 and R 950 000 worth of taxable supplies respectively. The business is considering registering with VAT pending your advice on when should they register for VAT. Amongst other FAC Entity transactions, the manager highlighted the following transactions for your attention. On 30 June 2022, FAC Entity made cash payments in respect of the following: A delivery truck was purchased for R230 000 cash from a registered VAT vendor. Entertainment costs in respect of staff to the amount of R69 000 were paid in cash to a registered VAT vendor. Financial services relating to banking transactions worth of R55 000 Assume that all the amounts above are VAT exclusive. Required: a. Advice on VAT registrations available and the taxable supplies threshold per each registration (5) b. Recognise the above transaction in an accounting equation using the following format, Ignore VAT. 5 Marks Asset Bank 50 000 Equity Liability Trade Creditors c. Suppose FAC is a registered VAT vendor, recognise the abovementioned transactions in the records (general journal) of FAC Entity for the month ended 30 June 2022. 8 Marks Use the following format for the journal entries, Do not Ignore VAT e.g. 1 Jan, Trade Creditors (SFP) (L) 20xx Debit 43 478 Credit VAT input (SFP) (A) Bank (SFP) (A) 6 522 50 00 d. What are the negatives of registering for VAT? 2 Marks