OSHWAL COLLEGE

ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS

(ACCA)
Foundation Level
FA2
Maintaining financial records

Revision questions and solutions

1. Janice buys a dress costing $120, shoes costing $60 and a jacket costing $190. These are all
gross figures, inclusive of sales tax at 17·5%.
How much sales tax in total has Janice paid?
A. $55·11
B. $64·75
C. $74·48
D. $68·51
Solution
Sales tax paid
Amount paid = 120+60+190 = $370------------ 117.5%
? --------- 17.5%
Sales tax paid=$55.10

Assignment
2. Sarah runs her own business and is registered for sales tax. This week her purchases were
$2,350 inclusive of sales tax and her sales were $1,000 exclusive of sales tax.
The rate of sales tax is 17·5%. At the end of the week what will the sales tax account in her
ledger show?
A. $350 receivable
B. $350 payable
C. $175 receivable
D. $175 payable
E.
3. Idris is a sales tax registered trader. On 1 October he purchases carpets for his new
showroom at the list price of $2,000. He is given a trade discount of 20% and the sales tax
rate is 17.5%.
What sum will Idris be invoiced, inclusive of sales tax?
A. $1,980
B. $2,350
C. $1,600
D. $1,880

Invoice price = ($2,000 x 80%) = 1,600(NET PRICE) X 117.5% = $1,880

Assignment
4. A sales tax registered business sells goods $1,200 plus $210 sales tax and purchases goods
costing $200 plus sales tax $35. Assuming these are the only transactions in the sales tax
period and that input tax is fully recoverable, how much sales tax is due/payable to/from
the government?
A. Payable $175
B. Recoverable $175
C. Payable $210
D. Payable $245
5. On 1 January 20X7, a business owed $6,500 in respect of sales tax (Liability)-CR. During the
quarter ended 31 March 20X7, the business made sales of $45,000 (excluding sales tax) and
made purchases amounting to $35,250 (including sales tax). If all transactions were subject
to sales tax at the rate of 17.5%, what was the balance on the sales tax account at 31 March
20X7?
A. $9,125 debit
B. $9,125 credit-----Sales tax payable
C. $8,207 debit
D. $8,207 credit

Solution

Output sales tax = 45,000 x 17.5% = $7,875

Input sales tax = 35,250----117.5%

? -17.5%
Input sales tax = 35,250 x 17.5/117.5 =$5,250
DR Sales tax account CR
Input sales tax 5,250 Balance b/d 6,500
Output sales tax 7,875
Sales tax payable(Bal c/d)-CR 9,125
14,375 14,375