A registered producer at VAT department sold product to wholesaler registered also for L.E 6000 who sold it to a registered retailer with a profit margin equal to 25% from the cost, who sold it to the consumer for L.E. 8000. If you learn that VAT rate is 14%.

A registered producer at VAT department sold product to wholesaler registered also for L.E 6000 who sold it to a registered retailer with a profit margin equal to 25% from the cost, who sold it to the consumer for L.E. 8000. If you learn that VAT rate is 14%.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 7MCQ

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

A registered producer at VAT department
sold product to wholesaler registered also
for L.E 6000 who sold it to a registered
retailer with a profit margin equal to 25%
from the cost, who sold it to the consumer
for L.E. 8000. If you learn that VAT rate is
14%.
Required:
a- Determine the gross value of the
invoice by producer, wholesaler and
retailer?
b- Determine tax due that must be turned
to VAT department by producer,
wholesaler and retailer?

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Step 1: Calculation of Gross Value of Invoice

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