BAW - I

Project 1. Develop understanding of taxation

Star and ABC are VAT registered sole proprietorship companies in Ethiopia Star is
manufacturing company and ABC is Wholesaler Company. Star purchased raw materials From
VAT registered suppliers with 250,000 VAT inclusive and resold after processing the raw
materials in to finished products to ABC company for birr 320,000 before VAT.ABC company
resold to retailer with the amount of 450,000 birr including VAT.
During the fiscal year other administrative expenses and employment income tax for Star
company paid birr 50,000 and 12,000 and birr 40,000and 11,500 for ABC company respectively.
(HINT: Any purchase and sales transaction is carried out with sole proprietorship)
Task 1.1 Calculate direct taxes for both companies.
Direct tax for star
Sale---------------------------------------------------------------320,000
Cost(250,000/1.15)------------------------------------------(217,391.30)
Gross profit-----------------------------------------------------102,608.70
Other expenses------------------------------------------------ (50,000)
Income before tax ---------------------------------------------52,608.70
Business profit tax (52,608.70*.20)-3630) ------------------6,891.74

Total direct tax for star = business profit tax + employment income tax
= 6,891.74+12,000 =18,891.74
Direct tax for ABC
Sales (450,000/1.15)--------------------------------------------391,304.35
Cost----------------------------------------------------------------- (320,000)
Gross profit--------------------------------------------------71,304.35
Other expenses-------------------------------------------- (40,000)
Income before tax ----------------------------------------31,304.35
Business profit tax (31,304.35*.15)-1,710 ------------2,985.65

Total direct tax for star = business profit tax + employment income tax
=2,985.65+11,500=14,485.65

Total direct tax for both companies=18,891.74+14,485.65=33,377.39

Task 1.2 Calculate indirect taxes for both companies.

Indirect tax for Star
Output VAT= 320,000*.15=48.000
Input VAT =250,000/1.15*.15=32,608.70
VAT liability to paid by star company =output VAT –input VAT=48,000-32,608.70=15,391.30

Indirect tax for ABC Company

Output VAT= 320,000*.15=48.000

Version I Page 1
 BAW - I

Input VAT =450,000/1.15*.15=58,695.65

VAT liability to paid by ABC company =output VAT –input VAT=58,695.65-48,000=10,695.65
birr
Total VAT liability to be paid by star and ABC company =15,391.30+10,695.65=26,086.65

Task 1.3 List types of stump duty tax in Ethiopia.

 Collective agreement
 Contract of employment
 Award, Bonds, warehouse bond
 Power of attorney
 Documents of title to property
 Notarial acts
 Lease ,including sub-lease and transfer of similar rights
 Memorandum and articles of association of any business
 Organization ,cooperative

Project 2.
Assume you are employee of Commercial Bank of Ethiopia the Bank assign you credit
department to administrate long term loan for 20/80 house scheme and loan for mega projects.
The bank also give foreign bank guarantee for the customer to do this the nature of your
department contact to different stakeholders (local and international) and use different
technologies to save the time your customers and improve the quality of the service to archive
the goals of the bank team work within the team and between other department are essential
Consider the above information perform the following tasks.
Task 2.1 Demonstrate a safety procedures work effectively in financial sector related to the above case
 Following OHS guidelines relevant to work place
 Completing required documentation
 Keeping work place clean and tidy
 Office practice manual
 Displaying health and safety procures ,magazines and other material
 City administration ,regional and federal state legislation
 Undergoing operator training when using new equipment or process
Task2.2 Demonstrate how to support the team member and list the possible team members
To support team member
 Problem solving
 Helping colleagues
 Providing encouragement
 Explaining
 Clarifying
 Providing feedback to team member
 Undertaking extra task if necessary
Team members
 Supervisor
 Coach/mentor
Version I Page 2
 BAW - I

 Other members of the organization

 Peers/work colleagues/team/ enterprise
Task 2.3 Demonstrate software applications and technology used to archive organizational goal related to
your bank.
Software applications
 Word processing.
 Database ,
 Accounting package
 Presentation package
 Email, internet
Technology
 Printer
 Scanners
 Photocopiers
 Computer technology such as laptops and personal computers
Project 3 Develop and use a personal budget and saving plan
Ato Alemu is salaried employee of XYZ cement manufacturing company in Diredawa.Ato
Alemu net salary is 750 birr per week. In Jan,2016 the company paid two month net salary bones
for each employee for the performance of the year 2015, Ato Alemu has fixed and Variable
expenditure.
Fixed expenditures are:-
 University fee 100 birr,
 Transport 200 birr,
 rent 300 birr and
 Magazine 40 birr
Variable expenditure is:-
 Cloth 50 birr,
 Mobile card 25 birr,
 recreation 100 birr,
 Gas 70 birr.
In order to increase his saving Ato Alemu understand to change his behavior and skills he
decide to decrease variable expenditure by 5% starting from Feb,2016. (Budget year of the
company from January1 to December 31) Based on the above information perform the following
tasks.
Task 3.1 Calculate the total saving for the month of January 2016
Task 3.2 Calculate the total saving for the month of February 2016
Description Income and expenditure for Income and expenditure for
the month of Jan,2016 the month of Feb,2016
Income
Salary 3,000 3,000
Bones 6,000 -
Total income 9,000 3,000
Fixed expenditure

Version I Page 3
 BAW - I

University fee 100 100

Transportation 200 200
Rent 300 300
Magazine 40 40
Total fixed expenditure 640 640
Variable expenditure
Cloth 50 47.5
mobile 25 23.75
Recreation 100 95
Gas 70 66.5
Total variable expenditure 245 232.75
Total expenditure 885 872.75
Total saving 8,115 2,127.25
Task 3.3 Demonstrate required behavior and skill to successful budgeting.
 Organizational skills
 Record keeping skills
 Disciplined approach to money
 Controlled spending
Task 3.4 Demonstrate obstacles of ato Alemu to achieve financial goals
 Being unemployed
 Insufficient to afford items
 Unexpected circumstances such as
 Losing a job,
 Falling ill and
 Not being able to work
Project 4 Process customers Account, Transaction and understanding of Ethiopian financial
system and market.
Ato kidane plan to open a café after a year. The total capital needed to open the business birr
100,000. To achieve the goal ato Kidane deposit 1,000 birr per month starting from January 2015
to December 31, 2015 to Dashen bank at Hawasa. During this period ato Kidane earn interest
income of birr 2,008 for deposited cash at the dashen bank. After one year(January 2016) ato
kidane give a loan proposal for deficit capital to dashen bank at the interest rate of 10% paid
quarterly at equal installment for 3 year and management fee 5% of the total loan amount equally
distribute for 3 year. Based on the above information perform the following tasks.

Task 4.1 Calculate the deficit capital of ato Kidane, If withdraw all deposited amount of money
Task 4.1
Ato kidane total saving =1000*12=12,000
Interest income=2,008
Total =14,008
Capital deficient =capital needed-deposit+interest =100,000-14,008=85,992
Task 4.2 The total interest expense and service charge at the end of second year (2015 and 2016)
installment =85,992/3*4=7,166
Management fee of the total loan=85,992*.05=4,299.60
Management fee for two year=4,299.60/3*2=2.866.40

Version I Page 4
 BAW - I

First year
Interest for quarter1 85,992*.10*1/4=2,149.80
Outstanding amount =85,992-7,166=78,826
Interest for quarter 2=78,826*.10*1/4=1,970.65
Outstanding amount=78,826-7,166=71,660
Interest for quarter 3=71,160*.10*1/4=1,791.50
Outstanding amount =71,660-7,166=64,494
Interest for quarter 4=64,494*.10*1/4=1,612.35
Outstanding amount=64,494-7,166=57,328
Total interest for first year=2,149.80+1,970.65+1,791.50+1,612.35=7,524.30
Second year
Interest for quarter1 =57,328*.10*1/4=1,433.20
Outstanding amount =57,328--7,166=50,162
Interest for quarter 2=50,162*.10*1/4=1,254.05
Outstanding amount=50,162-7,166=42,996
Interest for quarter 3=42,996*.10*1/4=1,074.90
Outstanding amount =42,996-7,166=35,830
Interest for quarter 4=35,830*.10*1/4=895.75
Total interest for second year=+1,433.20+1,254.05+1,074.90+895.75=4,657.90
Total interest and related service charge= 7,524.30+4,657.75+2,866.40=15,048.60

Task 4.3 If the government announce budget for the year 2009 E.C birr 200 billion Ethiopia
revenue and custom authority (ERCA) plan to generate internal revenue 180 billion for the year
2009 E.C. List the financial instrument to full fill budget deficiency.
Answer:
 Commercial bills
 Treasury bills
 Promissory notes
 Bills of exchange
 Government bills
Task 4.4 Assume you are an employee of Dashen bank as a clerk demonstrate the type of
deposit account that the bank provide for its potential customers.
Answer:
 Investment accounts
 Retirement accounts
 Saving accounts
 Accounts geared to the needs of particular groups

Version I Page 5