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

1) the amount that retailer pays to the wholesaler.

2) the VAT paid by the retailer.

 

Answer 1

Printed price of an article = Rs 2500

Sale price for wholesale = Rs 2500 - 20% of Rs 2500

`= "Rs"  2500 - 20/100 xx 2500`

`= "Rs"  2500 - "Rs"  500 = "Rs'  2000`

Tax charged by wholesaler = 10% of Rs 2000

`= 10/100 xx "Rs"  2000 = "Rs"  200`

Cost price for retailer = Rs 2000 + Rs 200 = Rs 2200

Tax charged by retailer = 10% of Rs 2500

`10/100 xx "Rs"  2500 = "Rs"  250`

VAT paid by retailer = Rs 250 - Rs 200 = Rs 50