Given: Objective:

All are Vat Reg 1. JE

Amount Vat INCLUSIVE 2. Compute BT - Vat pay / Ex input
3. Taxable Income

(Importer) Mr. O Mr. P

Purchase (Import) 40,000.00 Purchase from Mr. O 90,000.00

Sell to Mr. P 90,000.00 Sell to Mr. Q 170,000.00

Dr Cr Dr Cr
(1) JE (1) JE
Purchases 35,714.29 Purchases 80,357.14
Input Vat 4,285.71 Input Vat 9,642.86
Cash / AP 40,000.00 Cash / AP 90,000.00

Cash / AR 90,000.00 Cash / AR 170,000.00

Sales 80,357.14 Sales 151,785.71
Output Vat 9,642.86 Output Vat 18,214.29

(2)BT (2)BT
Output Vat 9,642.86 Output Vat 18,214.29
Input Vat 4,285.71 Input Vat 9,642.86
Vat Payable 5,357.14 Vat Payable 8,571.43

(3) Taxable Income (3) Taxable Income

Sales 80,357.14 Sales 151,785.71
AD: (Purchases) 35,714.29 AD: (Purchases) 80,357.14
Taxable Income 44,642.86 Taxable Income 71,428.57
 Mr. Q

Purchase from Mr. P 170,000.00

Purchase from Mr. R 50,000.00 Sell to Mr. Q
Sell to Customers (Non Vat) 400,000.00
Dr Cr Dr
(1) JE (1) JE
Purchases (Mr. P) 151,785.71 Purchases -
Input Vat 18,214.29 Input Vat -
Cash / AP 170,000.00 Cash / AP

Purchases (Mr. R) 44,642.86 Cash / AR 50,000.00

Input Vat 5,357.14 Sales
Cash / AP 50,000.00 Output Vat
COMPOUND ENTRY
Purchases (Mr. P & R) 196,428.57 (2)BT
Input Vat 23,571.43 Output Vat
Cash / AP 220,000.00 Input Vat
Vat Payable
Cash / AR 400,000.00
Sales 357,142.86 (3) Taxable Income
Output Vat 42,857.14 Sales
AD: (Purchases)
(2)BT Taxable Income
Output Vat 42,857.14
Input Vat 23,571.43
Vat Payable 19,285.71

(3) Taxable Income

Sales 357,142.86
AD: (Purchases) 196,428.57
Taxable Income 160,714.29
 Mr. R

50,000.00
Final customers
Cr Dr Cr
If Vat Reg
Purchases 357,142.86
Input Vat 42,857.14
- Cash / AP 400,000.00
Not Vat Reg
Purchases 400,000.00
44,642.86 Cash / AP 400,000.00
5,357.14

5,357.14
-
5,357.14

44,642.86
-
44,642.86