Updated on July 18, 2022
Question:
In the debtor and creditor control accounts, how can I figure out the applicable VAT?
Answer:
The totals charged to a client serve as the basis for controlling debtors and creditors’ accounts. They’re the
the whole sum due from one party to another, including any applicable VAT.
To put it another way, they are always inclusive of VAT, which means the total includes both the actual sale price and the applicable tax.
It’s critical to realize that the VAT % is always calculated using the goods or service’s actual sales value, before any additional VAT is applied. As an example, if the VAT rate is 14 percent, that’s 14/100, or 14 percent of the total sales amount.
We attribute a mathematical value of 100% to the sales amount because this is the basis of our calculation (the basis for calculating the VAT component).
Debtor and creditor totals are 100 percent + 14 percent = 114 percent in mathematical terms.
Using the Debtors/Creditor Total to Calculate the VAT Portion (VAT Inclusive Figure)
In order to compute VAT if you just have the amount of debtors or creditors, you multiply this last value by 14/114.
As an example, if our total debtors’ amount owed to the firm is R228 (R= rands = South African currency), then the following is how we handle it:
Total Debtors x 14/114 = VAT Portion
R228 divided by 14 divided by 114
R28
Using the Debtors/Total Creditor’s to Calculate the Actual Sales Figure (VAT Excluded) (VAT Inclusive)
There are two ways to calculate the sales amount here (before VAT):
1) If we already have the VAT figure, we can simply deduct the VAT figure from the total of the debtors:
Inverse R228 = R28
= 200 Rand
When the VAT figure is not available but the VAT rate is, we can multiply the total number of debtors by 100/114:
R228 × 100/114 = R228
= 200
This should be of assistance, and perhaps you now have a better grasp on how to compute VAT!
Check out the comments area below if you’d like further examples of how to compute VAT or any of the other data, like the sales amount or the debtors’ or creditor’s total.
Best,
Michael Celender is the author of this article.
Established Accounting for Students: A Beginner’s Guide
Inquiries and Tutorials:.
Discounted Settlement and Value Added Tax
Go back to the Accounting Questions and Answers section of our website.
Commentary on How to Calculate VAT.
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Adding VAT to the Selling Price (Mark-Up)
as stated by
I bought something to resell. The supplier’s unit pricing is R100. R115 is the total, including VAT (15 percent ). Input VAT of R15 has been paid.
When calculating my markup, do I use the R100 unit price or the R115 unit price?
R100 + markup or R115 + markup, which one should I charge VAT on?
1) You can include your mark-up percentage in either of these ways when determining the final selling price (including VAT).
Normally, your profit margin is based on the cost price (excluding VAT). A 20% markup would result in a retail price of R120 + VAT for the product. R100 x 1.20 = R120, which is the formula for this figure.
R138 would be the total selling price (R100 x 1.20 x 1.15). R115 x 1.20 is the same as this (the 20 percent mark-up percentage). Based on the R100, you can mark it up to the R115, but keep in mind that you still have to include 15% VAT.
2) Output VAT is included in the final selling price, which you charge to customers. You’ll pay R18 in output VAT if the final selling price is R138, which is 15/115 x R138. R138 – R120 is the same as this.
That’s good to know!
Best,
Micheal C.
Accounting for Students: The Basics
How to Calculate the Total Away from VAT
as stated by
How can I figure out the total exclusive) if I know the vat amount?
Assuming a 15% VAT rate, the following is the total cost:
Excluding everything else. VAT is equal to the VAT number multiplied by 100/15.
Best,
Micheal C.
Accounting-basics-for-students.com was founded by him.
Calculation of Value Added Tax (VAT)
as stated by
Is there any VAT included in the R85,500 suit’s price (VAT included)?
R85,500 × 14/114 = R85,500
= R10,000,500
A VAT rate of 14% is used in the calculation.
If it’s 15% or some other percentage, the formula is x 15%/115. Etc.
Best,
Micheal C.
Established Accounting for Students: A Beginner’s Guide
Make a merchandising cost estimate and a VAT calculation.
as stated by
For a total of R234.50, the item was sold. How do you figure out how much tax you’ll have to pay?
Thank you so much for your help.
Let’s assume that VAT is 10%.
Start with VAT because it’s the most straightforward:
Ten percent of R234.50 = R234.50
≈ 23.45 Rwandan roubles
The total selling price, including VAT, is now:.
the sum of these two amounts is equal to R234.50.
In other words, = R257.55
That’s good to know!
The writer’s name is Michael Celender.
Calculate Revenue from VAT Output for Finance Managers.
by: Tso Kg.
My VAT output is R630,902.10, and I need to know my revenue. Please help.
For the sake of argument, let’s pretend that the VAT rate is 15%.
V.A.T. Output=Revenue x Tax Rate
VAT Output = Revenue multiplied by 15 percent
So if we reverse the order of the equation, we get:
Revenue is calculated as follows: VAT output divided by 15%
Amount received = VAT Produced / 0.15
To calculate revenue, multiply R630,902.10 by 0.15.
At least R4,206,014
I’m hoping that makes sense.
The writer’s name is Michael Celender.
a tax that is both inclusive and exempt
the author, arun, a native of India
As far as I know, there is no such thing as “exclusive tax.” Please, if you don’t mind, provide me an example of what I’m asking for. THANK YOU!
All taxes, including VAT, are called “inclusive taxes.”
Debtors and creditors, for example, are examples of this. Alternatively, the whole cost of a transaction (including VAT). Alternatively, the total amount of money that a business receives in sales (including VAT).
Value added tax (VAT) is not included in the real sales price or purchase price.
Joe, for instance, charges $110 for goods, VAT included.
He is compensated with one hundred ten dollars. This is the total cost, which includes VAT.
VAT is not included in the final sales number. It will cost $100 in this situation.
The VAT is set at ten dollars. In this case, the rate is 10% ($10/$100 sales value).
In most cases, the VAT rate is included in the inquiry. Calculating either the exclusive or inclusive figure is all you need to do.
That’s good to know!
– Michael, thank you!
Vat
as stated by
Greetings, and have a wonderful day!
Consulting fees reached R88,000 for the month at a vat-inclusive hourly rate of R550/hour (inclusive). R88,000 or R88,000 excluding VAT (R77,192) should I use as my base income on my payslip?
You, as a salaried employee, aren’t entitled to any of the VAT you pay to the tax authorities; instead, your company is. There is no need for a firm to keep track of it and then pay it out.
This means that your salary should not include the VAT (the money paid to you). As a result, I would use the salary figure of R77,192 excluding VAT as your payslip salary.
That should be of some assistance.
– Michael, thank you!
VAT
as stated by
Including VAT at 14%, Monde offered a pair of shoes for R547,20. What is the cost price of the goods if his markup percentage as a percentage of cost is 25%?
Earned a profit
as stated by
Hi,
With or without VAT, how do I compute the gross profit earned if I’m given an exclusive cost price per unit of R2,104 and the inclusive price is R2,398.56?
If I understand correctly, I can calculate gross profit, however I’m not sure if VAT is included or excluded from it.
With these statistics, how may a gross margin percentage be calculated?
Thank you so much in advance!
A company’s gross profit consists of the sum of its sales and its costs of goods sold.
Opening Inventory + Purchases – Closing Inventory – Cost of Sales
VAT is not included in any of the above-mentioned examples.
So, the quick explanation is that gross profit does not include VAT.
Gross profit must be computed without accounting for sales tax.
Regarding your second query, I’m not certain of the exact amount of gross margin, but I believe it to be as follows:
The first step is to figure out the selling price:
= Cost Price x 60% of the original price
To put it another way: (R2,104 x 60 percent )
=R3,366.40
Percentage of gross profit:
In other words, the difference between the sales figure and the cost
3,366.40 / 3,366.40 = (3,366.40 – 2,104)
= 0.325
= 37.5% of the total
It’s hard to figure out how to calculate gross margin percentage!
That’s good to know!
The writer’s name is Michael Celender.
Accounting for Students: The Basics
Many thanks for your assistance.
since it was put together by Nathan
It’s a great refresher course on VAT.
Thank you for putting this information out there.
Welcome!
Compiling the VAT
as stated by
When computing VAT, why is it necessary to include an additional 10% of the item’s actual value?
This is because the VAT is 10%.
The ten percent VAT rate IS the ten percent VAT rate.
A company’s inventory, purchases, and other assets are always valued excluding VAT.
There’s a tax on your purchases since the company is required to do so. This includes the value of the products as well as any applicable VAT.
I hope that made sense!
– Michael, thank you!
South African VAT Representative
as stated by
what percentage of R1960 (South African Rands) would be subject to VAT if rendered to a customer on an invoice?
If the total invoiced amount is R1,960, then this is the VAT-inclusive sum.
Because of this, you should perform as follows:
R1,960 multiplied by 14/114
R241
Is that what I’m getting at?
– Michael, thank you!
Help
as stated by
Using the item price and selling price, how can I calculate the percentage?
Simple Method for Calculating Value Added Tax
as a result of
To put it in a nutshell, it’s that simple.
$4,954 for this item.
VAT: a levy of 14%
All you need to do to acquire the total sum is:
Decimalize the percentage rate you just calculated.
– 14 divided by 100 equals 0.14 percent (or simply move the decimal point 2 places from right to left)
Then
– Multiply the price of the item by the VAT decimal amount (4,954 X 0.14 = 693.56).
14 percent of 4954 equals 693.56
Then
Make a total of 5647.56 by adding the price of the item (4954 plus 693.56 = 5647.56)
It costs 5647.56 to buy the item, which includes VAT
The most important thing here is to know how to convert the percentage rate to a decimal figure, which is pretty straightforward (you just need to move the decimal point 2 places from right to left)
So, 23 percent is equal to 0.23.
2% is equal to 0.02%
0.1 percent is 0.010.
1% is equal to 0.01.
0.38 is 38 percent.
It’s just that simple!
Thank you so much, Chris! Sincerely,
Inclusive and exclusive at the same time
by: Boitumelo.
Greetings, everyone! I have a couple quick queries about
R498.93 is the total amount due.
1) Determine the total amount due, taking into account the 14% VAT.
In all, how much is Vat responsible for?
Incorporating or Omitting VAT
as stated by
If VAT is 14 percent, how can I tell when to apply 14/114?
When you begin with the inclusive figure of 114, use the 114 figure (cash received, debtors amount, creditors amount, etc.).
– Michael, thank you!
confussed
as stated by
What do you mean by “assuming” when you indicate that the vat percentage is 14 percent? There’s no denying that the VAT rate is 14.
The VAT rate is subject to change at any time. In addition, VAT is present in a variety of countries, not just one. The term “sales tax” is used in various nations to describe something similar. The VAT rate in South Africa is 14 percent (I believe), although other nations with VAT or a sales tax have varying rates.
Best,
Michael Celender is the author of this article.
Only taxes are included in this figure.
as stated by
Hi
how to compute the exclusive and inclusive numbers if I only have the VAT amount eggs R1356.52 You just have to move the dot for 10%, and 5% is always half of any 10%.
Tx
There are times when 10 percent isn’t so straightforward to compute, but that doesn’t make it any less difficult than 14 percent. I’m going to assume that the VAT on the eggs is R1356.52 and that the rate is 10%. I hope that’s correct.
It’s R1356.52 × 100/10 = R1356.52.
The total cost is 110/10 X R1356.52 = R1356.52.
The writer’s name is Michael Celender.
The Value Added Tax Rate
as stated by
If I buy a pen, the total cost, excluding VAT (14%), is R75. After that, there’s…
VAT is R75 x 0.14 = R10.50 for this example
The writer’s name is Michael Celender.
Input Tax Rates
as stated by
The lawyer charged me R975 plus VAT, however I’m only charged R1,111.50 here. How did we come up with the R1,111.50 figure?
The R975 is used as the basis for VAT calculations. If VAT is 14%, the R975 would be reduced by 14%. 14/100 X R975 = R136.50, which is how we can calculate VAT. R975 plus R136.50 equals R1,111.50 in today’s money.
This can also be done by saying 114/100 X R975 = R1,111.50.
That’s good to know!
Best,
Michael Celender is the author of this article.
Question
as stated by
A net purchase price of $48,000 would provide a gross cost of $54,720 if my VAT rate was 14% and I paid $48,000 for the goods. I have a study guide that lists 6,720 as the number of questions. How did the 6,720 figure come to be?
45,000 – 3,000 = 48,000 net buying price
To get 6,720, add VAT at a rate of 14% (then it says).
The total cost of the purchase is 54,720
My best guess is that the 6,720 was arrived at by multiplying 48,000 by 14.5%.
Best,
Michael Celender is the author of this article.
Calculate the Value Added Tax (VAT).
according to the author’s own words:
The final tally is 318.59.
Excluding Value Added Tax.
as stated by
If I want to buy a device that costs $1750 without vat, how much do I have to fork over in order to do so?
You multiply 1,750 by (100+VAT rate)/100.
For example, if VAT is 15%, you would multiply 1750 by (100+15%/100) to arrive at 2,012.50.
The writer’s name is Michael Celender.
Vat
by way of PG
When it comes to vat, what’s the best approach to do it?
a total of
divided by 100
OR
a total of
divided by 114
as stated by
The total cost, including VAT, is Rs 468.00. How does 468 x 13.5 percent (or, in other words, the sum of 468 + 13.5 percent) work?
What is the procedure for adding VAT?
Rozzi
add a tax rate of 14.4 percent to your final total.
7500. x 1.14 is $8,550.00 in total, including all fees and taxes.
check
The difference between the gross amount and the net amount is taxed at 14%.
8 550. In the neighborhood of 7 500 people. It’s equal to one thousand and fifty. the tax rate
or
It is necessary for you to determine the net amount of the vat.
1 050 / 100 = 100/14. = 7,500 net dollars excluding the inclusion of
or
you’ve got a lot of money.
8 550. 7 500 / 1.14 = net/excl
Calculate the total cost of the purchase or transaction using the applicable VAT rate.
by the following author: Edward
If you know the VAT amount but not the sale or purchase price, you can use the following formula to figure out the VAT backwards:
If the VAT bill was R5,000.00, then
Once you get R5,000.00, multiply it by 114, and divide it by 14.
There are a total of R40,714.28 in that sum.
As a result, your final bill came to R40,714.28.
by Michael Celender
As previously stated, the 114 component of the calculation is always included in the final bill. In other words, it is the sum of the product’s purchase price plus the additional 14 percent VAT.
In order to calculate the VAT, we must reverse our way backwards from the total amount paid.
14/114 x Paid in Full
It is equal to R72,514.34 divided by R14/114.
=R8,905.27
What Is the Best Way to Reverse the VAT Calculation?
from Bev
What is the VAT I paid on a total of R72,514.34 if I work backwards?
You can’t tell if you don’t know how much VAT you have.
as stated by
If only the VAT amount is known, how do I compute the inclusive/exclusive price? E.g. I’m aware I got hit with a VAT of $50, but what does the final price include? And what about the pricing excluding VAT?
Taxes of 7500
by Michael Celender
If the goods or service costs R7,500 in total, the VAT is calculated as follows:
R7,500 divided by 14/114 equals R921.
If the R7,500 price includes VAT, then the math goes like this:
R7,500 X 14/100 = 1,050 Rwh
To put it another way, if you choose option three, you’ll pay R8,550 (R7,500 + R1,050).
Taxes are paid by hand.
as stated by
Hello everyone, I’m looking for help. On a piece of paper, how do I calculate vat step by step? Need a quick refresher course before my job interview.
computing the value added tax
as stated by
How can I enter a number, say, 7500, and receive a valid response?
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