QUESTION 1 (20 MARKS)
PATA (Pty) Ltd manufactures and distributes spray tans. PATA have been registered for VAT
since 2016. Mr. Mahindi wants to appoint you as the new Accountant; however, he first wants
to test your VAT knowledge as it is an important output required from their Accountants.
During its current two-month period (which ended on 30th November 2018) it entered into,
amongst others, the following transactions.
1. PATA sold two hundred crates of spraytan cans for cash to Wellness Spa Bar in
2. PATA sold two truckloads (a truckload consists of 500 crates) on credit to Seabreeze
Spa (Pty) Ltd situated in Walvis Bay.
3. PATA sold and exported a 100 hundred crates of spraytan cans on credit to Tan-I-See
(Pty) Ltd in Kang, Botswana.
4. On the 15 November PATA purchased two new vehicles. A new Hilux pickup truck for
a Sales rep of N$275 000 (VAT exclusive), that will be used as a trade vehicle. And a
new Corolla for the marketing manager, costing N$215,000 (VAT exclusive). PATA will
pay Indongo Toyota 30 days after the invoice date.
5. Wages for the cleaner amounted to N$3,000 per month.
6. Advertising, printing, relabeling and marketing related to the new improved spraytan
amounted to N$546,250 (VAT inclusive)
7. Mr. Mahindi adopted the practice where he will provide the employees with free
office refreshments; this will create more productive employees. The costs of this
benefit amount to N$2,500 per month (VAT Inclusive). These expenses are paid out
of the petty cash register.
Price list Amount (Incl. VAT)
Spraytan cans per crate (100 cans in 1 crate) N$9,200.00
a.) List any five (5) requirements for an invoice to be a valid tax invoice. (5)
b.) Calculate PATA (Pty) Ltd’s VAT liability relating to the above specific transactions for
the 2-month period ending 30 November 2018
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