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Question

# A retailer buys an article for Rs. 800 and pays the sales-tax at the rate of 8%. The retailer sells the same article to a customer for Rs. 1,000 and charges sales-tax at the same rate. Find:(i) the price paid by a customer to buy this article(ii) the amount of VAT paid by the retailer

A
(i) Rs. 1,080 (ii) Rs. 16
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B
(i) Rs. 1,160 (ii) Rs. 14
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C
(i) Rs. 1,170 (ii) Rs. 12
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D
None of these
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Solution

## The correct option is B (i) Rs. 1,080 (ii) Rs. 16Given that, a retailer buys an article for Rs. 800 and pays 8% sales-tax.Also, the retailer sells the article for Rs. 1000, charging the sales-tax at the same rate.To find out: (i) The price paid by the customer to buy the article (ii) The amount of VAT paid by the retailer.(i) We know that, selling price of the article is Rs. 1000The customer had to also pay a sales-tax of 8%.∴ Price paid by the customer =1000+8% of 1000⇒1000+8100×1000=1000+80∴ The price paid by the customer to buy the article =Rs. 1080.(ii) We know that, the retailer bought the article for Rs. 800The retailer also paid a sales-tax of 8%.∴ Tax paid by the retailer =8% of 800⇒8100×800=Rs. 64Also, the retailer charged a sales-tax of 8% on the selling price of the article, Rs. 1000Hence, the sales-tax received =8% of 1000⇒8100×1000=Rs. 80∴ VAT paid by the retailer =80−64=Rs. 16Hence, the VAT paid by the retailer is Rs. 16.

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