Answers to worked example 1
- VAT charged by Trendy Suppliers on one dress. [3]
R285 ×14 = R35 (Remember: Inclusive is 14 ÷ 114)
114 - Selling price of one dress exclusive of VAT.
Cost price = R285 – R35 (VAT) = R250
Selling price = R250 × 140 = R350 (Remember: Mark up = 40% on cost price)[6]
100 - VAT charged to the customer on one dress:
Selling price = R350 (as calculated in No 2 above)
(Remember: Exclusive is 14 ÷ 100)
VAT charged = R350 × 14 = R49 [3]
100 - VAT charged by Trendy Suppliers on one pair of jeans:
R1803 × 14 = R25,20 [3] (Remember: Exclusive is 14 ÷ 100)
100 - Selling price of one pair of takkies inclusive of VAT:
Cost price = R110
Selling price = R110 × 140 = R154 (exclusive of VAT)
100
VAT = R154 × 14 = R21,56
100
VAT inclusive amount = R154 + R21,56 = R175,56 [9]
Worked example 2: Mizi Stores
Mizi Stores, owned by Mia Mizi, is registered for VAT.
Calculate the amount of VAT to be paid over to SARS for the period ending 28 February 2011. [17]
Information for this period ending 28 February 2011
- Total sales (cash and credit) (VAT inclusive) R60 000
- New computer bought (for office use) (VAT inclusive) R12 000
- Trading stock bought (VAT exclusive) R20 000
- Credit notes issued to customers (VAT inclusive) R 1 500
Answers to worked example 2
| | VAT output | VAT input |
a) Total sales: 60 0003 × 14
114 | R7 368,42 | |
b) New computer bought: 12 000 × 14
114 | | R1 473,68 |
c) Trading stock bought: 20 0003 × 14
100 | | R2 800 |
d) Credit notes issued: 1 500 × 14
114 | | R184,21 |
| | R7 368,42 | R4 457,89 |
VAT payable to SARS:
R7 368,423 − R4 457,893 = R2 910,53
Total VAT output – Total VAT input = VAT payable to SARS |
[17]