Question

A shopkeeper sells an article at the listed price of Rs 1,500 and the rate of VAT is 12% at each stage of sale. If the shopkeeper pays a VAT of Rs 36 to the government, what was the price, inclusive of tax, at which the shopkeeper purchased the article from the wholesaler? [3 MARKS]

Answer 1

Formula: 1 Mark
Steps: 1 Mark
Answer: 1 Mark

Let the price of the article, at which the shopkeeper purchased the article from the wholesaler be Rs x.
S.P. of shopkeeper = Rs 1500
VAT = 12%
VAT paid by the shopkeeper = 12% of Rs (1500-x)
$\Rightarrow 36=\frac{12}{100}\times (1500-x)$
$\Rightarrow 1500-x=300$
$\Rightarrow x=1200$
Hence, the price, inclusive of tax, at which the shopkeeper purchased the article form the wholesaler
$=Rs1200+12\%ofRs1200$
$=Rs(1200+144)$
$=Rs1344$