Question

The printed price of an article is Rs. $2,500$. A wholesaler sells it to a retailer at $20\%$ discount and charges sales-tax at the rate of $10\%$. Now the retailer, in turn, sells the article to a customer at its list price and charges the sales-tax at the same rate. Find:
(i) the amount that retailer pays to the wholesaler
(ii) the VAT paid by the retailer

• A. (i) Rs. $1,600$ (ii) Rs. $90$
• B. (i) Rs. $1,900$ (ii) Rs. $20$
• C. (i) Rs. $2,100$ (ii) Rs. $70$
• D. (i) Rs. $2,200$ (ii) Rs. $50$

Answer 1

The correct option is D (i) Rs. $2,200$ (ii) Rs. $50$

(i)The amount paid by retailer

List Price$=$Rs.$2500$

Discount rate$=20\%$

Discount$=20\%of2500$$=\frac{20}{100}\times 2500=Rs.500$

Then the price of the article after discount$=2500-500=Rs.2000$

Rate of sales tax$=10\%$

$\therefore$Tax paid by the retailer$=10\%of2000$

$\Rightarrow \frac{10}{100}\times 2000=Rs.200$

$\therefore$ retailer pay the amount to the wholeseller=$2000+200=Rs.2200$

(ii)VAT paid by the retailer

Retailer sell the article to customer at list price$=Rs.2500$

Rate of sales tax$=10\%$

$\therefore Taxpaidbythecustomer$$=10\%of2500$

$\Rightarrow \frac{10}{100}\times 2500=Rs.250$

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

VAT$=250-200=Rs.50$