Carol is a grade 12 learner. Her school launched an entrepreneurial competition where learners are to start a small business to be evaluated after six months The learners received basic VAT training and they are required to apply these VAT principles pretending they were in a real-life business scenario.
Carol decided to enter the competition by starting Carol's Candy Corner (CCC), selling chocolates, candy floss, cold drink, and chips. She is buying all her stock from her uncle who owns a wholesale retail store. Her uncle promised to help her save money to be able to expand her business in the near future.
She gave you the following information:
a) The Value Added Tax (VAT) percentage is 14%
b) CCC is a registered VAT vendor
c) The mark-up margin is 15%, which means the gross profit is calculated as 15% of the cost of sales
d) Her uncle promised to help her save by setting a "Saving benchmark" at R3,000.00
- He will invest an initial amount of 50% of the gross profit (excluding VAT) in the instance where the gross profit (excl VAT) exceeds R3,000.00 for January 2013
- He will invest an initial amount of 30% of the gross profit (excluding VAT) in the instance where the gross profit (excl VAT) is R3,000.00 or less for January 2013
e) Carol is very happy about the initial amount her uncle will invest for her, but she would also like to make a monthly contribution to this initial investment as referred to in
d). She is however uncertain how much to contribute monthly to arrive at her savings goal of R10,000 00 at the end of the savings term
- She wants her savings to be worth R10,000.00 after five years
- Her investment earns interest at a compound annual interest rate of 5%
- Her monthly contribution will be made at the end of each month
f) A list of barcodes and units sold for every product for January 2013
g) All the various types of products are marked with a barcode by her uncle in his store. He showed her how to read the barcode to determine the cost price of the products. The cost price including VAT per unit is hidden in the barcode.
Characters 1-2 Random Letter
Character 3 Cost price including VAT per unit
Character 4-5 Random letters
h) For stock counting purposes, Carol designed a unique product code for all the various types of products