Recording credit and sundry transactions August 2018 was the fourth month of trading for Oribi dealers, a registered VAT vendor that trades only with other registered vendors that are able to supply them with valid tax invoices. The business uses a perpetual inventory system. The following information relates to all the transactions that Oribi Dealers entered into during August 2018 which affected the general journal. Day 11- Received a cheque for R3800.00 from a debtor, Beauty Masilela, in full settlement of her account. Beauty owed R1130.67 on 1 August 2018. On 3 August 2018 she purchased trading goods from Oribi Dealers for R3455.20, including VAT. Some of these goods were returned by Beauty on 4 August and Oribi Dealers issued a credit note for R722.80(including VAT) to settle issue. Question 1: .interpret the information given above, and make the necessary entries in the General Journal of Oribi Dealers for August 2018. Calculate sales, VAT input and Trade receivables (Beauty masilela) in the General Journal.

Here are the calculations and the General Journal entries for Oribi Dealers.

Assumptions:

• The VAT rate is 15%.
• Cost of sales information is not provided, so entries for Cost of Sales and Inventory cannot be completed.

Calculations for General Journal Entries:

1. Sales on 3 August 2018:
The total amount for goods purchased was R3455.20, including VAT.

• Sales (excluding VAT) = $\frac{\text{R}3455.20}{1.15} = \text{R}3004.52$
• VAT Output = $\text{R}3455.20 - \text{R}3004.52 = \text{R}450.68$
• Trade Receivables (Beauty Masilela) will be debited by R3455.20.

2. Sales Return on 4 August 2018:
The credit note was for R722.80, including VAT.

• Sales Returns (excluding VAT) = $\frac{\text{R}722.80}{1.15} = \text{R}628.52$
• VAT Output (reduction) = $\text{R}722.80 - \text{R}628.52 = \text{R}94.28$
• Trade Receivables (Beauty Masilela) will be credited by R722.80.

3. Payment and Settlement Discount on 11 August 2018:
First, calculate Beauty Masilela's balance before the payment:

• Opening Balance (1 Aug): R1130.67 (Debit)
• Sales (3 Aug): R3455.20 (Debit)
• Sales Return (4 Aug): R722.80 (Credit)
• Balance before payment = $\text{R}1130.67 + \text{R}3455.20 - \text{R}722.80 = \text{R}3863.07$ (Debit)

Beauty paid R3800.00 in full settlement.

• Settlement Discount Allowed = $\text{R}3863.07 - \text{R}3800.00 = \text{R}63.07$
• Bank will be debited by R3800.00.
• Settlement Discount Allowed will be debited by R63.07.
• Trade Receivables (Beauty Masilela) will be credited by R3863.07.

General Journal of Oribi Dealers for August 2018

$$\begin{array}{|l|l|r|r|} \hline \textbf{Date} & \textbf{Account and Explanation} & \textbf{Debit (R)} & \textbf{Credit (R)} \\ \hline \text{Aug 3} & \text{Trade Receivables (Beauty Masilela)} & 3,455.20 & \\ & \quad \text{Sales} & & 3,004.52 \\ & \quad \text{VAT Output} & & 450.68 \\ & \text{Credit sale of trading goods to Beauty Masilela} & & \\ & \text{Cost of Sales (not provided)} & \text{XX} & \\ & \quad \text{Inventory (not provided)} & & \text{XX} \\ & \text{To record cost of goods sold} & & \\ \hline \text{Aug 4} & \text{Sales Returns} & 628.52 & \\ & \text{VAT Output} & 94.28 & \\ & \quad \text{Trade Receivables (Beauty Masilela)} & & 722.80 \\ & \text{Credit note issued for goods returned by Beauty Masilela} & & \\ & \text{Inventory (not provided)} & \text{XX} & \\ & \quad \text{Cost of Sales (not provided)} & & \text{XX} \\ & \text{To record return of goods to inventory} & & \\ \hline \text{Aug 11} & \text{Bank} & 3,800.00 & \\ & \text{Settlement Discount Allowed} & 63.07 & \\ & \quad \text{Trade Receivables (Beauty Masilela)} & & 3,863.07 \\ & \text{Cheque received in full settlement from Beauty Masilela} & & \\ \hline \end{array}$$

Summary of Requested Calculations:

• Sales (3 August): $\boxed{\text{R}3,004.52}$
• VAT Output (3 August): $\boxed{\text{R}450.68}$ (Note: The question asked for "VAT input", but as Oribi Dealers is the seller, this is VAT Output.)
• Trade Receivables (Beauty Masilela) in the General Journal:
  • Debit on 3 August: $\boxed{\text{R}3,455.20}$
  • Credit on 4 August: $\boxed{\text{R}722.80}$
  • Credit on 11 August: $\boxed{\text{R}3,863.07}$