Answer to Question #247173 in Accounting for James

Question

The legal firm, SA Attorneys is registered as a VAT vendor. VAT is charged at 15%. On 27 March 2020, the partners approved sponsoring the tuition fees of a newly registered legal student from a rural area. An amount of R6 900 for the first semester tuition fees was paid to SA University via an EFT. The entry on 27 March 2020 in a book of first entry will be: 

Answer 1

The entry on 27 March 2020 in a book of first entry will be as follows:

In the bank column – R6 900;

In the VAT output column – R900

In the sundries column – Donations – R6 000