Chapter 19 - Sales, excise, and property taxes. After you have mastered the material in this chapter, you will be able to: Compute sales tax on goods sold involving trade and cash discounts and shipping charges, explain and calculate excise tax, calculate the tax rate in decimal, compute property tax due.
Chapter 19 Sales, Excise, and Property Taxes McGrawHill/Irwin ©2011 The McGrawHill Companies, All Rights Reserved #19 Sales, Excise, and Property Taxes Learning Unit Objectives LU19.1 Sales and Excise Taxes Compute sales tax on goods sold involving trade and cash discounts and shipping charges Explain and calculate excise tax 192 #19 Sales, Excise, and Property Taxes Learning Unit Objectives LU19.2 Property Tax Calculate the tax rate in decimal Convert tax rate in decimal to percent, per $100 of assessed value, per $1,000 of assessed value, and in mills Compute property tax due 193 Sales Tax Taxes paid on certain goods and services 194 The sales tax percent is set by each state. Merchants collect funds and forward them to government agencies Sales Tax Compute sales tax and total price given the following information: Selling price of battery $32 Shipping charge $3.50 Trade discount 10.50% Sales Tax 5% Check: 100% is base + 5% is tax = 105% 1.05 x $21.50 = $22.58 + 3.50 = $26.08 195 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 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? Check: $40,000 = $37,383.18 1.07 196 Sales $37,383.18 x .07 = $2,616. 82 $37,383.18 + 2,616.82 = $40,000 Excise Tax Tax imposed on luxury items or nonessentials Tax is based on a percentage of the retail price of a product or service 197 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 Sales tax $5,000 x .07 = $350 Excise tax $5,000 x .08 = $400 Total cost 198 $5,000 $5,750 Property Tax Property taxes pay for local fire and police protection, schools, etc . They are based on assessed value Assessed value The value of property for the purposes of computing property taxes Assessed value = Assessment rate x Market value 199 Determining the Tax Rate Tax Rate = Budget needed Total assessed value 1910 Calculating Property Tax Step 3. Calculate property tax due Tax rate x assessed value (Step 1 x Step 2) Step 2. Identify tax rate Town budget needs Total assessed value Step 1. Compute assessed value Assessment rate x Market value 1911 Calculating Property Tax From the following facts: (1) calculate assessed value of Bill’s home; (2) calculate the tax rate for the community in decimal (to nearest ten thousandths); (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 decimal, per $100, per $1,000, and in mills Given: Assessed market value 40% Total budget needed $176,000 Market value of Bill’s home $210,000 Total assessed value $1,910,000 1. Calculate assessed value of Bill’s home 40 x $210,000 = $84,000 1912 Calculating Property Tax 2. Calculate the tax rate for the community in decimal (to nearest ten thousandths) 176,000 1,910,000 = .0922 per dollar 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) 1913 a .0922 = 9.22% b .0922 x 100 = $9.22 c .0922 x 1000 = $92.20 d .0922 = 92.2 Mills (or .0922 x 1,000) .001 Calculating Property Tax 4. Calculate the property tax due on Bill’s home in decimal, per $100, per $1,000, and in mills .0922 x $84,000 = $7,744.80 $9.22 x 840 = $7,744.80 $92.20 x 84 = $7,744.80 92.20 x .01 x $84,000 = $7,744.80 1914 Expressing Tax Rate Per $100 of Per $1,000 of By percent assessed value assessed value In mills 6.48% $6.48 $64.80 Per $100 of Per $1,000 of assessed value assessed value In mills By percent $63,000 x 6.48% $63,000 = 630 $100 630 x $6.48 $4,082.40 $4,082.40 1915 $63,000 = 63 $1,000 64.80 64.80 x .001x $63,000 63 x $64.80 $ 4,082.40 $ 4,082.40 ... involving trade and cash discounts and shipping charges Explain and calculate excise tax 19 2 #19 Sales, Excise, and Property Taxes Learning Unit Objectives LU19.2 Property Tax Calculate the tax rate in decimal Convert tax rate in decimal to percent, ... #19 Sales, Excise, and Property Taxes Learning Unit Objectives LU19.1 Sales and Excise Taxes Compute sales tax on goods sold involving trade and cash discounts ... per $100 of assessed value, per $1,000 of assessed value, and in mills Compute property tax due 19 3 Sales Tax Taxes paid on certain goods and services 19 4 The sales tax percent is set by each state. Merchants collect funds and forward