Tax sales

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September 6, 2016 at 8:10 pm #338417
firelion28
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Sir in one question it gives the opening capital as 6500, and profit after drawings as 32500. IT also mentions that the sole trader has put the home telephone bill through the business books amounting to 400 plus a tax for 70 additional. THe sole trader has charged only the net as he is registered for sales tax. IT says to find the closing capital
I did 6500 +32500=39000
But in the answer it also subtracts the 70 as tax? But why?
September 7, 2016 at 6:19 am #338475
John Moffat
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He has put the whole 470 through the books of the business and only charged himself with 400.
The business is not entitled to get the tax back because it was not an expense of the business, and so the owner must be charged with the 70 tax as well.
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