Question

The printed price of an article is Rs 60,000. The wholesaler allows a discount of 20% to the shopkeeper. The shopkeeper sells the article to the customer at the printed price. Sales tax (under VAT) is charged at the rate of 6% at every stage. Find :

(i) The cost to the shopkeeper inclusive of tax.

(ii) VAT paid by the shopkeeper to the Government.

(iii) The cost to the customer inclusive of tax

[3 MARKS]

(i) The cost to the shopkeeper inclusive of tax.

(ii) VAT paid by the shopkeeper to the Government.

(iii) The cost to the customer inclusive of tax

[3 MARKS]

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Solution

Each subpart: 1 Mark

The printed price of an article = Rs 60,000

Discount given by wholesaler =20%

Total discount =60,000×20100=Rs 12,000

So, selling price =Rs 60,000−Rs 12,000=Rs 48,000

VAT=Rs48,000×6100=Rs 2,2880

VAT paid to wholesaler by shopkeeper = Rs 2,880

(i) Cost to the shopkeeper inclusive of tax = Rs 48,000 + Rs 2,880 = Rs 50,880

(ii) VAT paid to shopkeeper by customer =Rs60,000×6100=Rs 3,600

VAT paid by shopkeeper to the Government = Rs 3,600−Rs 2,880=Rs 720

(iii) Cost to the customer inclusive of tax =Rs 60,000+Rs 3,600=Rs 63,600

The printed price of an article = Rs 60,000

Discount given by wholesaler =20%

Total discount =60,000×20100=Rs 12,000

So, selling price =Rs 60,000−Rs 12,000=Rs 48,000

VAT=Rs48,000×6100=Rs 2,2880

VAT paid to wholesaler by shopkeeper = Rs 2,880

(i) Cost to the shopkeeper inclusive of tax = Rs 48,000 + Rs 2,880 = Rs 50,880

(ii) VAT paid to shopkeeper by customer =Rs60,000×6100=Rs 3,600

VAT paid by shopkeeper to the Government = Rs 3,600−Rs 2,880=Rs 720

(iii) Cost to the customer inclusive of tax =Rs 60,000+Rs 3,600=Rs 63,600

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