TAX3761 Exam Pack
with Solutions
1. EXAM PREPARATION -TAX3761
, QUESTION 1 (20 marks, 24 minutes)
Skhothana (Pty) Ltd (Skhothana) is a South African company that imports luxury fashion
clothing brands from overseas to resell locally. Skhothana is registered for Value-Added Tax
(VAT) on the invoice basis and has a two-month tax period. The following amounts relate to
receipts and payments for the two-month period ending 31 March 2014.
Where applicable, all amounts are exclusive of VAT, unless otherwise stated.
Receipts Notes R
Cash sales 150 000
Credit sales 490 000
Rentals 1 140 400
Loan from Qhoma bank 2 100 000
Equity contributions from shareholders 2 150 000
Indemnity payment 3 80 000
Payments
Import of stock 4 300 000
Purchase of land 5 100 000
Sundry payments 6 32 490
Notes:
1. Rentals
Skhothana has excess floor space in its commercial buildings that it let to aspiring local
designers. The rentals received from the designers amounted to R62 400 for the two-month
period and constituted 8% of the total revenue of the company.
As part of its remuneration package, the company lets residential accommodation to its
employees at a discount to market value. The amount received for the period was R78 000
and makes up 10% of the total revenue of the company.
2. Loan from Qhoma Bank
In March 2014, Skhothana opened two new stores locally. To finance the expansion, the
company acquired a loan of R100 000 from Qhoma Bank and received equity contributions
of R150 000 from the company’s shareholders.
3. Indemnity payment
On 6 March 2014, a fire broke out at the Johannesburg branch and stock valued at R80 000
was destroyed. The insurance company indemnified the company with a cash payment of
R80 000 (inclusive of VAT).
4. Import of stock
On 28 February 2014, Skhothana imported the Ska-Vela brand of shoes from Italy. The
cost price and value for customs duty purposes was R300 000. Import surcharges of
R2 400 were levied. The date reflected on the Customs Billing of Entry is 4 March 2014.
with Solutions
1. EXAM PREPARATION -TAX3761
, QUESTION 1 (20 marks, 24 minutes)
Skhothana (Pty) Ltd (Skhothana) is a South African company that imports luxury fashion
clothing brands from overseas to resell locally. Skhothana is registered for Value-Added Tax
(VAT) on the invoice basis and has a two-month tax period. The following amounts relate to
receipts and payments for the two-month period ending 31 March 2014.
Where applicable, all amounts are exclusive of VAT, unless otherwise stated.
Receipts Notes R
Cash sales 150 000
Credit sales 490 000
Rentals 1 140 400
Loan from Qhoma bank 2 100 000
Equity contributions from shareholders 2 150 000
Indemnity payment 3 80 000
Payments
Import of stock 4 300 000
Purchase of land 5 100 000
Sundry payments 6 32 490
Notes:
1. Rentals
Skhothana has excess floor space in its commercial buildings that it let to aspiring local
designers. The rentals received from the designers amounted to R62 400 for the two-month
period and constituted 8% of the total revenue of the company.
As part of its remuneration package, the company lets residential accommodation to its
employees at a discount to market value. The amount received for the period was R78 000
and makes up 10% of the total revenue of the company.
2. Loan from Qhoma Bank
In March 2014, Skhothana opened two new stores locally. To finance the expansion, the
company acquired a loan of R100 000 from Qhoma Bank and received equity contributions
of R150 000 from the company’s shareholders.
3. Indemnity payment
On 6 March 2014, a fire broke out at the Johannesburg branch and stock valued at R80 000
was destroyed. The insurance company indemnified the company with a cash payment of
R80 000 (inclusive of VAT).
4. Import of stock
On 28 February 2014, Skhothana imported the Ska-Vela brand of shoes from Italy. The
cost price and value for customs duty purposes was R300 000. Import surcharges of
R2 400 were levied. The date reflected on the Customs Billing of Entry is 4 March 2014.
