You are provided with information relating to Garland Limited for the financial year ended 30 June 2008. 2. Required: 2.1. Briefly explain why Garland Ltd has to make special entries for VAT (15%) in its books. (4) 2.2. Analyze only the transactions where VAT is affected for the current financial year in the table provided. Show the account debited, account credited and the missing amounts. (20) BACKGROUND INFORMATION AND OPENING BALANCES: . The business was started in 2006 with an authorised share capital of 500 000 ordinary shares of R2,00 par value each. . By 1 July 2019, the start of the current financial year, the business had issued 300 000 of these shares at par. TRANSACTIONS FOR THE YEAR ENDED 30 JUNE 2008: 1. Credit purchases of trading stock for the year amounted to R700 000, excluding VAT. 2. Interim dividends of R48 000 were paid to the shareholders. 3. Further 120 000 shares were issued at a premium of 80 cents each. 4. Cash sales for the year were R1 380 000 VAT inclusive. The cost price of these goods was R1 000 000. The business uses the perpetual (continuous) inventory system. 5. VAT tax payments totalling R287 100 were made to SARS - this amount was owed from the previous VAT period. 6. The income tax assessment for income tax for the year amounted to R308 712. 7. A final dividend of 19 cents per share was declared. A vehicle with a direct cost value totalling R 1670 375 were purchased from a registered VAT vendor to be used as a delivery vehicle for the business. An EFT for the full amount was paid to the seller. Another vehicle was purchased as for the director office space to be used as an artefact on display. This vehicle will not be used in the production of income as the idea is to donate it to a charity of choice in 5 years. The vehicle costs with delivery and setup amounted to R166 750 VAT inclusive and payment is due at year-end. You are provided with information relating to Garland Limited for the financial year ended 30 June 2008. 2. Required: 2.1. Briefly explain why Garland Ltd has to make special entries for VAT (15%) in its books. (4) 2.2. Analyze only the transactions where VAT is affected for the current financial year in the table provided. Show the account debited, account credited and the missing amounts. (20) BACKGROUND INFORMATION AND OPENING BALANCES: . The business was started in 2006 with an authorised share capital of 500 000 ordinary shares of R2,00 par value each. . By 1 July 2019, the start of the current financial year, the business had issued 300 000 of these shares at par. TRANSACTIONS FOR THE YEAR ENDED 30 JUNE 2008: 1. Credit purchases of trading stock for the year amounted to R700 000, excluding VAT. 2. Interim dividends of R48 000 were paid to the shareholders. 3. Further 120 000 shares were issued at a premium of 80 cents each. 4. Cash sales for the year were R1 380 000 VAT inclusive. The cost price of these goods was R1 000 000. The business uses the perpetual (continuous) inventory system. 5. VAT tax payments totalling R287 100 were made to SARS - this amount was owed from the previous VAT period. 6. The income tax assessment for income tax for the year amounted to R308 712. 7. A final dividend of 19 cents per share was declared. A vehicle with a direct cost value totalling R 1670 375 were purchased from a registered VAT vendor to be used as a delivery vehicle for the business. An EFT for the full amount was paid to the seller. Another vehicle was purchased as for the director office space to be used as an artefact on display. This vehicle will not be used in the production of income as the idea is to donate it to a charity of choice in 5 years. The vehicle costs with delivery and setup amounted to R166 750 VAT inclusive and payment is due at year-end