Sparkle and Shine $($Pty$)$ Ltd $($Sparkle and Shine$)$ is a bridal boutique co$-$founded by

lifelong friends Emily and Sarah. Sparkle and Shine offers a diverse selection of new,

second$-$hand, and imported wedding dresses, along with expert alteration services.

Founded by passionate entrepreneurs, they cater to brides of all styles and budgets,

providing personalised consultations to ensure a perfect fit. Sparkle and Shine is

dedicated to making every bride feel radiant on her special day.

Sparkle and Shine is a resident of South Africa and a registered Category B VAT

vendor which makes $100\%$ taxable supplies.

Below are transactions incurred by Sparkle and Shine for the two$-$month VAT period

under review ending February $2024.$ All transactions are conducted with VAT vendors.

Where applicable, all amounts are VAT inclusive, unless otherwise stated:

Description Note Value

Income:

Local Sales $$ Wedding dresses R$330000$

Export Sales $-$ Wedding dresses $1$ R$204000$

Alteration services R$25000$

Consultation fees $2$ R$40000$

Interest received on favourable bank balance R$1000$

Expenses:

Purchases $$ new dresses R$90000$

Purchases $$ second$-$hand dresses R$40000$

Purchases $$ imported dresses $3$ R$200000$

Fuel R$1500$

Bank charges R$500$

Rental expenses $4$ R$50000$

Salaries paid R$60000$

Telephone and Wifi R$4000$ Marketing and Advertising $5$ R$2000$

Celebratory event $6$ R$10000$

Coffee machine $7$ R$7000$

Excess payment $8$ R$32000$

Notes:

$1.$ Sparkle and Shine exported ten wedding dresses from one of their latest

collections, "Enchanted Elegance," to a customer in Germany on $10$ January

$2024.$

$2.$ Revenue from personalised consultations, where brides receive expert

guidance and advice in selecting their dream wedding dress.

$3.$ Sparkle and Shine imports wedding dresses from Paris to diversify the

boutique$$s collection and add an exquisite touch of elegance to its collection.

The imported dresses had a total cost price and a value for customs duty

purposes of R$200000.$ Import surcharges of R$10000$ were levied. The dresses

were ordered on the $2$nd of January $2024$ and arrived at Sparkle and Shine on

$26$ February $2024.$ Customs VAT was paid at customs on the $26$th of February

$2024,$ all valid customs clearance documentation was received.

$4.$ Cost of renting the retail space where the bridal boutique operates.

$5.$ Expenditures on advertising campaigns, promotional materials, website

maintenance, and social media marketing to attract customers.

$6.$ On $14$ January $2024,$ Sparkle and Shine hosted a function for their committed

staff to celebrate their latest collection. The costs related to this celebratory

event summed up to R$10000.$

$7.$ Emily and Sarah purchased a coffee machine on $1$ February $2024$ for the

employees of Sparkle and Shine, as well as to provide coffee to brides during

fittings.

$8.$ On $1$ October $2023,$ Sparkle and Shine made a sale of a wedding dress to a

bride for R$23000($including VAT$).$ However, due to an error by the sales

assistant, the card machine was charged R$32000$ during the payment process.

Upon discovering the mistake a few days later, Sparkle and Shine's bookkeeper

promptly attempted to contact the bride to obtain her banking details for a

ANNEXURE I: FORMATIVE ASSESSMENT $2$

$100$ HTAX$331-1-$Jul$-$Dec$2024-$FA$2-$V$4-$AP$-31072024$

refund. Unfortunately, despite several attempts, the bride could not be reached,

likely due to changed contact information or other unforeseen circumstances.

REQUIRED:

$1\mathrm{.}1$ With reference to note $8,$ the excess payment received, discuss all the VAT