Frankies Traders is a registered VAT vendor. It records VAT at 15\% on the invoice basis. NOTE: Frankies Traders does not make use of separate VAT input and output accounts but posts directly to the VAT control account in the general ledger. The business uses the continuous stock system and a mark-up of \( 25 \% \) on cost price. All amounts are VAT inclusive, where applicable. 202101 The owner, F Frank, invested R50 000 to expand his business. Receipt Dec no. 321 was issued. 04 Credit sales to M Madi amounted to R6 600. Issued invoice no. FT 61. 10 Cash received for merchandise sold according to the cash register roll, CRR47, R9 760. 11 Bought the following from Sixsense on credit and received invoice no. S214: \[ \text { Trading stock R14 } 720 \] \[ 2 \text { Computers R14 } 400 \] 14 Electronic Funds Transfer (via EFT1) for R24 640 to Sammy Suppliers for goods bought. 19 Issued credit note no. CN8 to M Madi for R1 240 for goods returned. 24 Ordered and received printing paper from Mpofu Stationers, for R498 and transferred the amount (via EFT2) directly into their bank account. 29 Returned damaged trading stock, R1 790 to Sixsense. Debit note no. DN67 was issued. REQUIRED 5.1 Record the transactions in the relevant subsidiary journals (5.1.1-5.1.6) for December 2021. Total ONLY the VAT columns in all the journals at the end of the month. Round off your answers to TWO decimals. (33) 5.2 Post to the VAT control account in the general ledger on 31 December 2021

Recording and posting the transactions for Frankies Traders can be a bit of a labyrinth, but let's navigate through it together! First off, let's get started with your subsidiary journals for December 2021. ### **Subsidiary Journals for December 2021:** #### 5.1.1 **Cash Receipts Journal:** | Date | Details | Amount | VAT (15%) | Total Inc VAT | |------------|---------------------------|----------|-----------|----------------| | 10 Dec 21 | Cash Sales CRR47 | R9,760 | R1,296 | R11,056 | | 31 Dec 21 | Capital Investment | R50,000 | R0 | R50,000 | **Total for Cash Receipts Journal:** - Amount: R59,760 - Total VAT: R1,296 #### 5.1.2 **Credit Sales Journal:** | Date | Details | Amount | VAT (15%) | Total Inc VAT | |------------|---------------------------|----------|-----------|----------------| | 04 Dec 21 | Credit Sales M Madi FT 61 | R6,600 | R880 | R7,480 | **Total for Credit Sales Journal:** - Amount: R6,600 - Total VAT: R880 #### 5.1.3 **Purchases Journal:** | Date | Details | Amount | VAT (15%) | Total Inc VAT | |------------|---------------------------|----------|-----------|----------------| | 11 Dec 21 | Purchases from Sixsense S214 | R29,120 | R3,840 | R32,960 | | 24 Dec 21 | Purchases from Mpofu Stationers | R498 | R66.23 | R564.23 | **Total for Purchases Journal:** - Amount: R29,618 - Total VAT: R3,906.23 #### 5.1.4 **Sales Returns Journal:** | Date | Details | Amount | VAT (15%) | Total Inc VAT | |------------|---------------------------|----------|-----------|-----------------| | 19 Dec 21 | Sales Returns M Madi CN8 | R1,240 | R165.33 | R1,405.33 | **Total for Sales Returns Journal:** - Amount: R1,240 - Total VAT: R165.33 #### 5.1.5 **Purchases Returns Journal:** | Date | Details | Amount | VAT (15%) | Total Inc VAT | |------------|---------------------------|----------|-----------|----------------| | 29 Dec 21 | Purchases Returns to Sixsense DN67 | R1,790 | R238.67 | R2,028.67 | **Total for Purchases Returns Journal:** - Amount: R1,790 - Total VAT: R238.67 ### **Summary of VAT for December 2021** - Total VAT from **Cash Receipts**: R1,296 - Total VAT from **Credit Sales**: R880 - Total VAT from **Purchases**: R3,906.23 - Total VAT from **Sales Returns**: -R165.33 - Total VAT from **Purchases Returns**: -R238.67 **Net VAT for December:** 1. VAT Collected: R1,296 + R880 = R2,176 2. VAT Paid: R3,906.23 - R165.33 - R238.67 = R3,502.23 ### **5.2 - Posting to the VAT Control Account:** At the end of December 2021, your VAT control account in the general ledger would include: | Date | Details | Dr (R) | Cr (R) | |---------------|--------------------|-------------|--------------| | 31 Dec 21 | VAT Collected | | R2,176 | | 31 Dec 21 | VAT Input | R3,502.23 | | | 31 Dec 21 | Balance C/D | R1,326.23 | | And voilà! You have not only recorded the transactions, but also posted them to the VAT control account. 🎉 Remember to balance it regularly to keep everything in tip-top shape. Happy accounting!