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ou are the financial manager of Emperors (Pty) Ltd, a property company earning its income from

both commercial rentals (office blocks and factories) and residential rentals (town houses). The

company has a December year-end.

Your responsibilities include the completion of its two-month VAT return (VAT 201). As Emperors

(Pty) Ltd makes both taxable and exempt supplies for VAT purposes, it has applied the turnover-

based method of apportionment to arrive at an acceptable input tax ratio of 74%. The accounting

system operated by Emperors (Pty) Ltd has provided the following analysis of its income and

expenditure for its two-month tax period ending 31 January. All amounts are inclusive of VAT, where

applicable.

Income R

Commercial rentals 849 300

Residential rentals 159 600

Interest levied on overdue rentals 7 410

Insurance settlement (Note 1) 136 800

Expenditure

Purchase of new factory building, to be let (paid in cash) 769 000

Purchase of two residential flats, to be let (paid in cash) 468 500

Bank charges 1 254

Audit fees 14 250

Salaries and wages 66 120

Bakkie (Note 2) 150 600

Depreciation (Note 2) 5 105

Maintenance (Note 3) 16 416

Insurance premiums (Note 4) 15 048

Interest incurred on mortgage bonds 85 500

Office Equipment Rentals: (following three lines)

Facsimile Machine 2 736

Printer 1 482

Coffee machine 1 026

Employees' expenses (Note 5) 741

Petrol 2 830

Bad debts - made up as follows:

Debts written off for commercial-rental debtors 9 804

Debts written off for residential-rental debtors 6 384

Travelling expenses - made up as follows:

Hotel accommodation and meals incurred by employee during out-of-town business trip to

investigate new commercial property 2 508

Overseas air ticket for employee and his wife as part of employee's salary package 9 804

Notes:

The insurance settlement of R136 800 was for a single-cab light-delivery vehicle (‘bakkie’) that was

stolen from Emperors (Pty) Ltd's premises in the previous month. This bakkie was used for both the

residential and commercial properties. At the time it was stolen, the book value of this single-cab

bakkie was R160 200. In January, on receipt of the insurance settlement, a new single-cab bakkie

was purchased by Emperors (Pty) Ltd (see note 2).

2. A new single-cab bakkie was purchased in January at a cost of R150 600 (including VAT) to

replace the single-cab bakkie that was stolen (see note 1 above). Depreciation was provided for on

the bakkie purchased by Emperors (Pty) Ltd. This bakkie is used to transport its maintenance teams

between its various buildings.

3. Maintenance costs of R16 416 include paint, paint brushes and other hardware items

purchased to effect repair work to all its buildings.

4. Insurance premiums, in terms of an all-comprehensive business insurance policy, to the

amount of R15 048 were incurred in respect of all the assets of the company.

Employees’ expenses of R741 were incurred in respect of tea and coffee provided to employees

while they were working in their offices.

YOU ARE REQUIRED TO match each of the items in the left hand collumn with a reason picked from

the right hand collumn.

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ou are the financial manager of Emperors (Pty) Ltd, a property company earning its income from both commercial rentals (office blocks and factories) and residential rentals (town houses). The company has a December year-end. Your responsibilities include the completion of its two-month VAT return (VAT 201). As Emperors (Pty) Ltd makes both taxable and exempt supplies for VAT purposes, it has applied the turnoverbased method of apportionment to arrive at an acceptable input tax ratio of 74%. The accounting system operated by Emperors (Pty) Ltd has provided the following analysis of its income and expenditure for its two-month tax period ending 31 January. All amounts are inclusive of VAT, where applicable. Income R Commercial rentals 849 300 Residential rentals 159 600 Interest levied on overdue rentals 7 410 Insurance settlement (Note 1) 136 800 Expenditure Purchase of new factory building, to be let (paid in cash) 769 000 Purchase of two residential flats, to be let (paid in cash) 468 500 Bank charges 1 254 Audit fees 14 250 Salaries and wages 66 120 Bakkie (Note 2) 150 600 Depreciation (Note 2) 5 105 Maintenance (Note 3) 16 416 Insurance premiums (Note 4) 15 048 Interest incurred on mortgage bonds 85 500 Office Equipment Rentals: (following three lines) Facsimile Machine 2 736 Printer 1 482 Coffee machine 1 026 Employees' expenses (Note 5) 741 Petrol 2 830 Bad debts - made up as follows: Debts written off for commercial-rental debtors 9 804 Debts ...
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