5.1 Wis registered for sales tax. The managing director has asked four staff in the accounts department why the output tax for the last quarter does not equal 20% of sales (20% is the rate of tax). Which one of the following four replies she received was NOT correct? A The company had some exports that were not liable to sales tax. B The company made some sales of zero-rated products. C The company made some sales of exempt products 'D The company sold some products to businesses not registered for sales tax. (2 marks)5.2 The following information relates to Eva Co's sales tax for the month of March 20X3: $ Sales (including sales tax) 109,250 Purchases (net of sales tax) 64,000 Sales tax is charged at a flat rate of 15%. Eva Co's sales tax account showed an opening credit balance of $4,540 at the beginning of the month and a closing debit balance of $2,720 at the end of the month. What was the total sales tax paid to regulatory authorities during the month of March 20X3? g 11910 (2 marks)5.3 Alana is not registered for sales tax purposes. She has recently received an invoice for goods for resale which cost $500 before sales tax, which is levied at 15%. The total value was therefore $575. What is the correct entry to be made in Alana's general ledger in respect of the invoice? A Dr Purchases $500, Dr Sales tax $75, Cr Payables $575 B Dr Purchases $575, Cr Sales tax $75, Cr Payables $500 Dr Purchases $500, Cr Payables $500 c ‘D _ Dr Purchases $575, Cr Payables $575 (2 marks)54 Information relating to Lauren Co's transactions for the month of May 20X4 is shown below: $ Sales (including sales tax) 140,000* Purchases (net of sales tax) 65,000 Sales tax is charged at a flat rate of 20%. Lauren Co's sales tax account had a zero balance at the beginning of the month and at the end of the month * Lauren Co's sales for the month of $140,000 included $20,000 of sales exempt from sales tax. What was the total sales tax paid to regulatory authorities at the end of May 20X4 (to the nearest $)? ‘A $7,000 B $20,000 C $23,333 D $13,000 (2 marks)5.5 A business commenced with capital in cash of $1,000. Inventory costing $800 plus sales tax is purchased on credit, and half is sold for $1,000 plus sales tax, the customer paying in cash at once. The sales tax rate is 20% What would the accounting equation after these transactions show? A Assets $1,800 less Liabilities $200 equals Capital $1,600 Assets $2,200 less Liabilities $1,000 equals Capital $1,200 Assets $2,600 less Liabilities $800 equals Capital $1,800 B c 'D __ Assets $2,600 less Liabilities $1,000 equals Capital $1,600 (2 marks)5.6 Trade receivables and payables in the financial statements of a sales tax registered trader will appear as described by which of the following? B c Exclusive of sales tax in the statement of financial position The sales tax is deducted and added to the sales tax account in the statement of financial position Sales tax does not appear in the statement of financial position because the business simply acts as a collector on behatf of the tax authorities (2 marks)5.7 Which of the following correctly describe the entry in the sales account for a sale for a sales tax registered trader? A Credited with the total of sales made, including sales tax Debited with the total of sales made, including sales tax Debited with the total of sales made, excluding sales tax (2 marks) com5.8 Sales (including sales tax) amounted to $27,612.50, and purchases (excluding sales tax) amounted to $18,000. What is the balance on the sales tax account, assuming all items are subject to sales tax at 17.5%? A $962.50 debit B $962.50 credit C $1,682.10 debit D $1,682.10 credit (2 marks)