- This topic has 9 replies, 3 voices, and was last updated 9 years ago by
.
- Posts
teacher:
costing $200 plus sales tax at 17.5% on credit ..
so the sales tax is included in the 200? I cant understand this expression of EnglishNo. If it says 200 plus sales tax it means that the sales tax is extra to the 200 and so the full price is higher.
The free lectures on sales tax will help you.
Thank you. one more question:
I met such a question:
Which one of the following would occur if the purchase of computer stationary was debited to computer equipment at cost account ?
the answer is : An overstate of profit and an overstate of non-current assets.I really cant understand what is “be debited” , and could you please explain the logic for me?
Debited means that a debit entry was made. (If you are not sure what that is then you really should watch the free lectures – I cannot type them out on here 🙂 )
Computer stationery is an expense which therefore reduced the profit. However instead of debiting computer stationery they should have debited computer equipment which is an asset in the Statement of financial position.
Again, you should watch the lectures. It is the whole point of this website, and if you watch them all then you have everything you need to be able to pass Paper F3.
Hey john,
Following is the question. I have some confusion in it. Would you help me logic.A sole trader’s business made a profit of $32,500 during the year ended 31 March 20X8. This figure was after deducting $100 per week wages for himself. In addition, he put his home telephone bill through the business books, amounting to $400 plus sales tax at 17.5%. He is registered for sales tax and therefore has charged only the net amount to his statement of profit or loss and other comprehensive income.
His capital at 1 April 20X7 was $6,500. What was his capital at 31 March 20X8?Now question is Closing capital = opening capital + increase in capital
why sales tax would be deducted from capital since output tax is receiveable. Double entry would be Dr telephone expense 400 Dr sales tax 70 Cr cash Account 470.
It is because the telephone bill was for his home use and not for the business.
Therefore the sales tax is not recoverable and the whole amount of the bill (including tax) is drawings (which reduces the capital).
- You must be logged in to reply to this topic.