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Value Added Tax (VAT)

Value Added Tax (VAT). Note. 1- The amount shall be paid if the total Sales VAT is greater than the sum of the purchase VAT. 2- The amount of the return if the total Sales VAT is less than the sum of the purchase. Amount to pay  the difference between vat of sales and vat of purchase.

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Value Added Tax (VAT)

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  1. Value Added Tax (VAT)

  2. Note 1- The amount shall be paid if the total Sales VAT is greater than the sum of the purchase VAT. 2- The amount of the return if the total Sales VAT is less than the sum of the purchase. Amount to pay  the difference between vat of sales and vat of purchase.

  3. Case(2): The following are some information for Hadara Company, and tax registration number 563105114 for 12/2006: Purchases : 1- On 3/12 purchased 5 fridges amounted 3000 per unit and not include VAT, from Naser Company invoice number 64 on credit. 2- On 7/12 purchased 5 TVs 16« with price 1300 per unit, and 6 TVs 20« with price 1700 per unit and the price not include VAT, invoice number 257.

  4. 3- On 16/12 purchased 10 fans with price 105 per unit include VAT and 8 heaters with price 120 per unit include VAT from Sharaf Company invoice number 346 with cheque. 4- On 31/12 paid Paltel expense invoice number 791 with total amount 232 . 5- On 31/12 the company return 2 fridges to Naser company and get sales return invoice number 6.

  5. Sales: 1- On 3/12 sold 3 fridges with total value 12600. 2- On 15/12 sold 4 SONY TVs 16« with price 1800 per unit includes VAT and 6 TVs 20« with price 2200 per unit include VAT with cheque. 3- On 23/12 sold 8 fans with price 760 for the basic value by cheque. Note : The NIS is the currency used.

  6. Required: 1-Prepare the statement of sales and purchase for 12/2006. 2-Prepare the journal entries for the transactions that occurred on 12/2006. 3- Determine the VAT to be paid or refund, and prepare the related entries.

  7. Purchase statement :

  8. Purchase entries:

  9. Sales statement:

  10. Sales entries:

  11. VAT = In tax – out tax = 4289.23– 3981.04 = 308.19 The adjusting entry for preparingfinancial statement 12/2006 is: VAT 308.19 Accrued VAT 308.19 According to the tax law (VAT must be paid before 15/1/2007) The entry of : Accrued VAT 308.19 Cash 308.19

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