CIMA BA3 · Chapter 4 · Question 6 of 10
During a quarter a business made sales of $186,000 excluding sales tax and purchases of $104,400 including sales tax. Sales tax is 20% on all items. How much sales tax is payable to the tax authority for the quarter?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $19,800
Explanation
Output tax = 20% x $186,000 = $37,200. Input tax on a tax-inclusive amount = $104,400 x 20/120 = $17,400. Tax payable = $37,200 - $17,400 = $19,800.
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