Embed Size (px)
Citation preview
SALES, EXCISE, AND PROPERTY TAXES
Chapter Nineteen
Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
19-2
1. Compute sales tax on goods sold involving trade and cash discounts and shipping charges.
2. Explain and calculate excise tax.
LU19-1: Sales and Excise Taxes
LEARNING UNIT OBJECTIVES
LU 19-2: Property Tax
1. Calculate the tax rate in decimal.
2. Convert tax rate in decimal to percent, per $100 of assessed value, per $1,000 of assessed value, and in mills.3. Compute property tax due.
19-3
Sales taxes are paid on certain goods and services.
SALES TAX
The sales tax percent is set by each state. Merchants collect funds and forward them to
government agencies.
19-4
SALES TAX
Compute sales tax and total price given the following information:Selling price of battery: $32Shipping charge: $3.50Trade discount: 10.50%Sales tax: 5%
Check 100% is base + 5% is tax = 105%
Manual calculation 32.00 Price -10.50 Trade discount 21.50 Taxable
x .05 1.08 Tax
+21.50 Taxable +3.50 Shipping$26.08 Total price w/shipping
1.05 x $21.50 = $22.58 + 3.50 = $26.08
19-5
CALCULATING ACTUAL SALES
Actual sales = Total sales 1 + Tax rate
Register receipts total $40,000 for the day, which included a 7% sales tax. What are actual sales?
$40,000 1.07
Check
= $37,383.18
Sales $37,383.18 x .07 = $2,616.82$37,383.18 + 2,616.82 = $40,000
Example:
19-6
Excise tax is based on a percentage of the retail price of a product or service.
EXCISE TAX
Excise tax is imposed on luxury items or nonessentials.
19-7
EXCISE TAX
Angel Rome bought a fur coat for $5,000. Sales tax is 7% and excise tax is 8%. What is her total cost?
Cost $5,000
Sales tax $5,000 x .07 = $350
Excise tax $5,000 x .08 = $400
Total cost $5,750
19-8
Assessed value –
The value of property for the purposes of computing property
taxes.
PROPERTY TAX
Assessed value = Assessment rate x Market value
Property taxes pay for local fire and police protection, schools, etc. They are based on assessed value.
19-9
DETERMINING THE TAX RATE
Budget needed Total assessed value
Tax rate =
19-10
Step 2. Identify tax rate.
Town budget needsTotal assessed value
Step 3. Calculate property tax due.
Tax rate x Assessed value (Step 1 x Step 2)
Step 1. Compute assessed value.
Assessment rate x Market value
CALCULATING PROPERTY TAX
19-11
CALCULATING PROPERTY TAX
1. Calculate the assessed value of Bill’s home:
.40 x $210,000 = $84,000
From the following facts: (1) calculate the assessed value of Bill’s home; (2) calculate the tax rate for the community in decimal (to nearest ten thousandth); (3) convert the decimal to (a) %, (b) per $100 of assessed value, (c) per $1,000 of assessed value, and (d) in mills (to nearest hundredth); and (4) calculate the property tax due on Bill’s home in (a) decimal, (b) per $100, (c) per $1,000, and (d) in mills.
Given:Assessed market value: 40% Total budget needed: $176,000Market value of Bill’s home: $210,000 Total assessed value: $1,910,000
19-12
CALCULATING PROPERTY TAX(CONT.)
a. .0922 = 9.22%
3. Convert the decimal to (a) %, (b) per $100 of assessed value, (c) per $1,000 of assessed value, and (d) in mills (to nearest hundredth):
2. Calculate the tax rate for the community in decimal (to nearest ten thousandths):
176,0001,910,000 = .0922 per dollar
b. .0922 x 100 = $9.22c. .0922 x 1000 = $92.20d. .0922 / .001 = 92.2 Mills (or .0922 x 1,000)
19-13
CALCULATING PROPERTY TAX(CONT.)
a. .0922 x $84,000 = $7,744.80
4. Calculate the property tax due on Bill’s home in decimal, per $100, per $1,000, and in mills.
b. $9.22 x 840 = $7,744.80
c. $92.20 x 84 = $7,744.80
d. 92.20 x .01 x $84,000 = $7,744.80
19-14
EXPRESSING TAX RATE
Per $100 of Per $1,000 of By Percent Assessed Value
Assessed Value In Mills 6.48% $6.48 $64.80 64.80
Per $100 of Per $1,000 of By Percent Assessed Value Assessed Value In Mills$63,000 x 6.48% $63,000 = 630 $63,000 = 63 64.80 x .001 x $63,000
$100 $1,000630 x $6.48 63 x $64.80
= $4,082.40 = $4,082.40 = $4,082.40 = $4,082.40
