Question

A shopkeeper sells an article at its marked price which is Rs. 8000 and charges VAT at the rate of 12% from the customer. If the shopkeeper pays a VAT of Rs. 120, then the price paid by shopkeeper inclusive of the tax will be :

• A. Rs. 7820
  
• B. Rs. 7460
  
• C. Rs. 7620
  
• D. Rs. 7840

Answer 1

The correct option is D

Rs. 7840

Shopkeeper charges 12% tax for an article which is priced at Rs. 8000
So, tax charged by the shopkeeper= $\frac{12}{100}\times 8000$
=Rs. 960
Now, VAT= Tax charged -Tax paid
120 = 960 - tax paid
Tax paid by shopkeeper = 840
Let the shopkeeper buy the product at Rs. x tax, it is 12%.
So 12% of x= 840
$\frac{12}{100}\times x=840$
x= 7000
So the price paid by shopkeeper
= Rs. 7000 + 12% of 7000
= Rs. 7000 + Rs. 840
= Rs. 7840