TAX 1501 ASSIGNMENT 3

QUESTION 1 (25 marks, 30 minutes) Forever Diamonds (Pty) Ltd carries on a business as a manufacturer of jewelry and is also a jewelry retailer. The company runs its manufacturing operations in Johannesburg and has three retail stores located in Far City, Home-way and Wow Shopping Centres. The company is a vendor for Value-Added Tax (VAT) purposes and is registered on the invoice basis. The company had the following income and expenditure for the two-month tax period ending on 31 March 2020. All amounts include VAT at 15%, unless otherwise stated. R Income Bad debts recovered 76 667 Cash sales 966 000 Insurance payout on stolen stock 843 334 Interest earned on current account held with SABA Bank 46 000 Invoices of credit sales 230 000 Sale of glass jewelry display counters 184 000 Sale of jewelry exported to foreign customers 575 000 Expenditure Auditor’s fees 23 000 Bank charges 8 050 Credit note issued to customers on a sale previously included in income 2 300 Depreciation 50 000 Entertainment of customers 15 000 Fees for exchanging currency 3 000 Fuel expenses 9 500 Municipal electricity 11 500 Printing and stationery 9 200 Purchase o