Reference no: EM132559767

Question 1 - The transactions of a sales tax registered business for the quarter ended 31 March 2020 are as follows:

Sales (including $50,000 of zero rated items) 850, 000 (excluding sales tax)

Expenses (including $2,000 of gross non-business items) 662,000 (including sales tax)

The business records show an opening credit balance on the sales tax account of $26, 757 and a closing credit balance of $24, 772.

The rate of sales tax is 20%.

What was the total sales tax paid to the tax authorities in the quarter?

$29,985

$25,318

$61,652

$51,985

Question 2 - Transformer Ltd received an invoice for a new machine as follows:

List price 150,000

Less: Trade discount (15,000)

Service agreement (3 years) 3,000

Installation 1,500

Delivery 1,000

Total price 140,500

A further settlement discount of 5% was offered for payment within 14 days. Transformer Ltd took advantage of this and paid the invoice after 10 days.

What amount should be capitalised as "plant and machinery" in the financial statements?

$137,500

$135,000

$133,475

$130,750