Question

An article is marked at $\text{Rs.}500$. The wholesaler sells it to a retailer at $20\%$ discount and charges sales-tax on the remaining price at $12.5\%$. The retailer, in turn, sells the article to a customer at its marked price and charges sales-tax at the same rate. Calculate:
(i) the price paid by the customer
(ii) the amount of VAT paid by the retailer.

• A. (i) Rs. 662.50 (ii) Rs. 11.50
• B. (i) Rs. 562.50 (ii) Rs. 12.50
• C. (i) Rs. 472.50 (ii) Rs. 13.50
• D. (i) Rs. 410.50 (ii) Rs. 14.50

Answer 1

The correct option is B (i) Rs. 562.50 (ii) Rs. 12.50

Marked Price, $\text{M.P.}=\text{Rs.}500$

Discount$=20\%$

$\therefore$, Selling price of the article for wholesaler$=\text{Rs.}(500-20\%$ of $500)$

$=\text{Rs.}(500-\frac{20}{100}\times 500)$

$=\text{Rs.}(500-100)$

$=\text{Rs.}400$

Tax paid by the wholesaler$=\text{Rs.}\frac{12.5}{100}\times 400=\text{Rs.}50.0$

(i)The price paid by the customer

$\text{M.P.}=\text{Rs.}500$

Sales tax rate $=12.5\%$

Price paid by the customer $=\text{Rs.}(500+\frac{12.5}{100}\times 500)$

$=\text{Rs.}(500+62.5)$

$=\text{Rs.}562.50$

Tax paid by the customer$=\text{Rs.}\frac{12.5}{100}\times 500$

$=\text{Rs.}62.50$

(ii)The amount of the VAT paid by the retailer:

VAT=Tax paid by the customer $-$ Tax paid by the retailer

$\text{VAT}=\text{Rs.}(62.50-50)=\text{Rs.}12.50$