Question

The printed price of an air conditioner is 45000/-. The wholesalers allow a discount of 10% to the shopkeeper. The shopkeeper sells the article to the customer at a discount of 5% of the Marked price. Sales Tax (under VAT) is charged at the rate of 12% at every stage. Find:

1. VAT paid by the shopkeeper to the government.
2. The total amount paid by the customer inclusive of tax.

Answer 1

Hint:For solving this problem, first calculate the discounted price by using the discount percentage. Now, calculate the selling price of the article. After finding the selling price, impose a tax percentage on the selling price. This will give us the VAT paid by the shopkeeper and by adding tax to selling price, we obtain the total amount paid by the customer.

Complete step-by-step answer:
According to the problem statement, we are given that the printed price of an article is Rs. 45000.

1. The discount offered by the wholesaler is 10% (0.10). The sales tax charge is 12% (0.12).
   Now, we calculate the discounted price by using the formula: $\text{discount = discount rate}\times \text{cost price}$.
   Discounted price of the article $=0.1\times 45000=Rs.4500$
   The cost price for the shopkeeper = printed price of the article – discounted price of the article
   The cost price for the shopkeeper = $45000-4500=Rs.40500$.
   We calculate the tax paid by the shopkeeper by using formula: $\text{tax paid = tax rate }\times \text{ actual cost price}$.
   The tax paid by the customer $=0.12\times$cost price for the customer
   The tax paid by the customer$=0.12\times 40500=Rs.4860$.
   Hence, the shopkeeper paid Rs. 4860 as VAT to the shopkeeper.

2. The discount offered by the shopkeeper is 5% (0.05). The sales tax charge is 12% (0.12).
   Printed price of article = Rs.45000
   From the formula mentioned in part (1), we get
   Discounted price of the article $=0.05\times 45000=Rs.2250$
   The cost price for the customer = printed price of the article – discounted price of the article
   The cost price for the customer $=45000-2250=Rs.42750$.
   From the formula mentioned in part (1), we get
   The tax paid by the customer $=0.12\times$cost price for the customer
   The tax paid by the customer$=0.12\times 42750=Rs.5130$.
   The total amount paid by customer inclusive of the tax = cost price of customer + tax paid by customer
   The total amount paid by customers inclusive of the tax $=Rs.47250+Rs.5130=Rs.47880$.
   Hence, the total amount paid by the customer inclusive of the tax is Rs. 47880.

Note: Students must be careful while calculating the cost price for the customer. It should be remembered that the discount must be subtracted from the actual cost instead of adding. Also, the rate of interest is different for or discount and sale tax. So, they must be applied at the correct amount.