Question - Sales Tax

[Prajna B]

Hi F3 Students,

Try to solve the following Question

I will post the answer very shortly.

Ronald purchased goods on credit from Ben. Ben allowed a 10% trade discount to Ronald and he offered a further 5% settlement discount if Ronald pays the bill within 14 days. The list price of the goods is $450,000 and the sales tax charged at 17.5%.

What amount will be entered in Ben’s receivable ledger?

A $528750
B $472331
C $452081
D $475875


Best of luck & Getthru

Prajna B

[iffikhan]

First of all i think the requirement should be "Ronald’s payable ledger" not "Ronald’s receivable ledger" or "Ben’s receivable ledger"

see since the list price is 450000
we have to less the discounts received both of them regardless of if he receives them or not these not r offered to him..
1step 450000-10%=405000
2step 405000-5%=384750(further discount)
now apply sales tax
384750+17.5%=452081.25(rounding it off will give u answer in option C)

[Prajna B]

Hi,

The correct option is B and the calculation is as follows

List price 1111111111111450,000
Less:
10% trade discount 11111(45,000)
11111111111111111111 405,000
Less:
5% further discount 11111384,750
Sales tax
(17.5% of 384,750) 11111167,331

The amount that will go in Ben’s recioevable ledger will be
405,000 + 67,331 = 472,331

Prajna B

[Dagabie]

List price $450,000

add tax17.5% $78,750

Total $528,750

Less Trade disc
10% ($52,875)

Answer (D) $475,875

[Dagabie]

SALES TAX AND WITHHOLDING TAX

What is the sales tax and withholding tax on the following transactions?

A taxable trader sold 100ctns of goods at $30 each(tax inclusive).
Discount allowed for prompt payment 2%.
Sales tax 17.5%. Withholding tax 5%.

[falah]

here is the correct calculation

list amount 450,000

Trade discount 10% ( 45,000)

405,000


sales tax 70,875


answer 475,875 D