Johnson’s Hardware, a registered taxpayer, during the month of December purchased $100 000 of standard rate merchandise. During the same month cutlass costing $300 000 and taxable consulting services amounted to $90 000 was incurred respectively. The total sales inclusive of GCT for the month amounted to $1 500 000. All merchandise purchased was sold with a mark rate of 30%. Required: a. List four (4) obligations of Johnson’s hardware as a registered taxpayer. b. Differentiate between the following terminologies: i. tax avoidance and tax evasion ii. input and output tax iii. standard rated items and zero rated items. c. Compute the following for the month of December 2013 for Johnson’s hardware: i. total input tax ii. output tax iii. tax liability

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Johnson’s Hardware, a registered taxpayer, during the month of December purchased $100 000 of standard rate merchandise. During the same month cutlass costing $300 000 and taxable consulting services amounted to $90 000 was incurred respectively. The total sales inclusive of GCT for the month amounted to $1 500 000. All merchandise purchased was sold with a mark rate of 30%.

Required:

a. List four (4) obligations of Johnson’s hardware as a registered taxpayer.

b. Differentiate between the following terminologies:

i. tax avoidance and tax evasion

ii. input and output tax

iii. standard rated items and zero rated items.

c. Compute the following for the month of December 2013 for Johnson’s hardware:

i. total input tax

ii. output tax

iii. tax liability

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