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During the quarter, Sugar purchased several items of furniture for her office for a total of 1500 exclusive of VAT. A 5% discount was applied to this amount as Sugar had purchased two items or more.
Why is the input VAT not 1500 multiply by 20%. The VAT is charged on the actual amount paid.
Should this discount be assumed to be trade discount or discount for prompt payment.
Also the question says that a 5% discount was applied to this amount. So the amount of 1500 should be assumed to be net of discount or before applying the discount