Which one of the following calculations would a book retailer use to find the value-added tax charged at 8% on books with a net price of $1 250? (a) Identif...
Question 1 Report
Which one of the following calculations would a book retailer use to find the value-added tax charged at 8% on books with a net price of $1 250?
(a) Identify the correct calculation.
A: $1250 ÷ 8
B: $1250 × 8 ÷ 100
C: $1250 × 100 ÷ 8
D: $1250 - 8 [1]
(b) Calculate the VAT charged. Show your working. [2]
(c) Calculate the total price paid by the customer, including VAT. Show your working. [2]
Answer Details
(a) VAT of 8% means finding \(\frac{8}{100}\) of the net price. The correct calculation is $1250 × 8 ÷ 100 [1].
(b)
\[\$1250\times\frac{8}{100}=\$100\]
The VAT charged is $100 [2].
(c) The customer pays the net price plus VAT:
\[\$1250+\$100=\$1350\]
The total price, including VAT, is $1350 [2]. VAT is added to, rather than subtracted from, the net price.
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