Sunday, 14 August 2011

Need an Idea for Sales Tax Calculation!?

Question by Michael loves laughing: Need an Idea for Sales Tax Calculation!?
Hello, I want to have your opinions about this calculation. I am living in WA, and sales tax rate for the state is 8.9%.
Recently, I looked at the formula to calculate sales tax, and it looked not right.
The formula was,
Sales amount-(Sales amount/1.089)= Sales Tax
We can calculate the sales tax merely if we just multiple 8.9% from the sales amount like sales amount X 8.9%.
To help your understanding, if we sold $ 3,000 for the month, sales tax would be $ 267 (3000X8.9%), However, if I used another formula, sales taxable amount is $ 2,754.82 (3000/1.089). Then, subtract from the original sales amount, 3000-2754.82, that is $ 245.18.
What do you think which one is right?


Answer
Answer by Steve DYou may have worded this incorrectly.

The correct answer depends on whether the $ 3,000 is the sales amount of the goods sold, or the sales amount of the goods plus tax (i.e., daily receipts). If,

Corporate Finance

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