Zain Co. is a registered trader with the VAT Directorate of the Ministry of Finance of Bahrain. Zain Co. is dealing with the products which are standard rated @10%, zero-rated and exempt rated. Manama is supposed to submit VAT returns on quarterly bases. Following are the transactions for 2021.July 10Purchased 150 units of Item X from Ali @BD 150 each (net) on cash. This item is standard rated at the time of purchase and zero-rated at the time of sales. July 13Sold 120 units of Item X for BD 200 (net) to Ahmad on credit July 14Purchased 1000 units of Item A from Rami @BD 200 each (net) on credit. This item is standard-rated supplies at the time of purchases and sales. (credit terms 5/25, n/30) July 16Sold 200 units of Item A for BD 200 (net) to Hanan on credit. July 26Sold 200 units of Item A for BD 250 (net) to Ahmad on cash. Trade discount was 5%. July 29Returned 100 units of item A to Rami. July 31Settled the dues of Rami and got cash discount. August 8Purchased 400 units of Item B from Wafa @BD 240 each (net) on cash. This item is standard-rated supplies at the time of purchases and exempt-rated at the time of sales. The trade discount was 5%. August 29Sold 100 units of Item B @440 each (Net) on credit to Hamdan. August 31Hamdan returned 20 units and give money for the remaining units.Assume that credit is claimed in books of account on September 30, 2021 and VAT return is submitted on October 25, 2021 with VAT payment or refund.Instructions:Prepare the Journal entries for the above transactions.

Input VAT: It is the amount paid towards VAT when goods are purchased. The seller of goods need to…

Answered: Zain Co. is a registered trader with…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Zain Co. is a registered trader with the VAT Directorate of the Ministry of Finance of Bahrain. Zain Co. is dealing with the products which are standard rated @10%, zero-rated and exempt rated. Manama is supposed to submit VAT returns on quarterly bases. Following are the transactions for 2021.

July 10	Purchased 150 units of Item X from Ali @BD 150 each (net) on cash. This item is standard rated at the time of purchase and zero-rated at the time of sales.

July 13	Sold 120 units of Item X for BD 200 (net) to Ahmad on credit

July 14	Purchased 1000 units of Item A from Rami @BD 200 each (net) on credit. This item is standard-rated supplies at the time of purchases and sales. (credit terms 5/25, n/30)

July 16	Sold 200 units of Item A for BD 200 (net) to Hanan on credit.

July 26	Sold 200 units of Item A for BD 250 (net) to Ahmad on cash. Trade discount was 5%.

July 29	Returned 100 units of item A to Rami.

July 31	Settled the dues of Rami and got cash discount.

August 8	Purchased 400 units of Item B from Wafa @BD 240 each (net) on cash. This item is standard-rated supplies at the time of purchases and exempt-rated at the time of sales. The trade discount was 5%.

August 29	Sold 100 units of Item B @440 each (Net) on credit to Hamdan.

August 31	Hamdan returned 20 units and give money for the remaining units.

Assume that credit is claimed in books of account on September 30, 2021 and VAT return is submitted on October 25, 2021 with VAT payment or refund.

Instructions:

Prepare the Journal entries for the above transactions.

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