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Question

# An article is marked at 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
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B
(i) Rs. 562.50 (ii) Rs. 12.50
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C
(i) Rs. 472.50 (ii) Rs. 13.50
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D
(i) Rs. 410.50 (ii) Rs. 14.50
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Solution

## The correct option is B (i) Rs. 562.50 (ii) Rs. 12.50Marked Price, M.P.=Rs. 500Discount=20%∴, Selling price of the article for wholesaler=Rs. (500−20% of 500) =Rs. (500−20100×500) =Rs. (500−100) =Rs. 400Tax paid by the wholesaler=Rs. 12.5100×400=Rs. 50.0(i)The price paid by the customerM.P.=Rs. 500Sales tax rate =12.5%Price paid by the customer =Rs. (500+12.5100×500) =Rs. (500+62.5) =Rs. 562.50Tax paid by the customer=Rs. 12.5100×500 =Rs. 62.50(ii)The amount of the VAT paid by the retailer:VAT=Tax paid by the customer − Tax paid by the retailerVAT=Rs. (62.50−50)=Rs. 12.50

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