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A factory sells an item to the wholesalers at a profit of 5%. The wholesaler sells the item to the retailer at a profit of 10%. The retailer sells the item to the public at a profit of 25%. All businesses add VAT of 15%. Required: 2.1 Complete the following table. Factory Wholesaler Retailer ? 5 430,00 ? 3 345,60 ? Cost Price R 600 ? ? 100,00 Profit 2.2 Complete the table below by calculating the missing amounts. Amount (R) VAT (R) 156,80 ? ? VAT ? ? 15,68 0 Exempt Selling Price ? ? ? TOTAL (R) ? ? 4058,40 ? ? 74,90 ?

A factory sells an item to the wholesalers at a profit of 5%. The wholesaler sells the item to the retailer at a profit of 10%. The retailer sells the item to the public at a profit of 25%. All businesses add VAT of 15%. Required: 2.1 Complete the following table. Factory Wholesaler Retailer ? 5 430,00 ? 3 345,60 ? Cost Price R 600 ? ? 100,00 Profit 2.2 Complete the table below by calculating the missing amounts. Amount (R) VAT (R) 156,80 ? ? VAT ? ? 15,68 0 Exempt Selling Price ? ? ? TOTAL (R) ? ? 4058,40 ? ? 74,90 ?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How do I complete the table on question 2.2 ?

 
 
A factory sells an item to the wholesalers at a profit of 5%. The wholesaler sells the item to the retailer at a profit of 10%. The retailer sells the item to the public at a profit of 25%. All businesses add VAT of 15%. Required: 2.1 Complete the following table. Factory Wholesaler Retailer Cost Price R 600 ? 5 430,00 ? 3 345,60 ? ? 100,00 ? ? Profit ? ? 2.2 Complete the table below by calculating the missing amounts. Amount (R) VAT (R) 156,80 ? ? VAT ? ? ? 15,68 0 Exempt Selling Price ? ? ? TOTAL (R) ? ? 4058,40 ? ? 74,90 ?
Transcribed Image Text:A factory sells an item to the wholesalers at a profit of 5%. The wholesaler sells the item to the retailer at a profit of 10%. The retailer sells the item to the public at a profit of 25%. All businesses add VAT of 15%. Required: 2.1 Complete the following table. Factory Wholesaler Retailer Cost Price R 600 ? 5 430,00 ? 3 345,60 ? ? 100,00 ? ? Profit ? ? 2.2 Complete the table below by calculating the missing amounts. Amount (R) VAT (R) 156,80 ? ? VAT ? ? ? 15,68 0 Exempt Selling Price ? ? ? TOTAL (R) ? ? 4058,40 ? ? 74,90 ?
Expert Solution
Step 1: Define Value Added Tax (VAT)

The Value Added Tax (VAT) is added at each stage of sales of a product. A seller may get an input tax credit for VAT paid. The Value Added Tax (VAT) paid or collected may be computed using the reversal method or by backward computation.

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