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at 01.12.2012 A company owed sales tax to the state of 23,778$. during the month of december she had the following transactions:
– sales of $ 800,000 exclusive of 17.5% sales tax
– purchases of $ 590,790 inclusive of 17.5 % sales taxduring the month she has not paid tax to the state. how much did A company owe to the state for the sales tax at the end of December?
At the start of the month there was 23778 owing.
In addition they owe the tax on the sales. The sales were exclusive of tax and so the tax is 800,000 x 0.175.
However the will subtract the tax suffered on the purchases. The purchases were inclusive of tax and so the tax is 590790 x 0.175/1.175
If you complete the calculations you will end up with tax of 75788 owing 🙂
(You might find the free lecture on sales tax useful)
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