Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc....

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Chapter 19 Sales, Excise, Sales, Excise, and Property Taxes and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

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Transcript of Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc....

Page 1: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

Chapter 19

Sales, Excise, Sales, Excise, and Property Taxesand Property Taxes

Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Page 2: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 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

Sales, Excise, and Property Taxes#19#19Learning Unit ObjectivesSales and Excise TaxesLU19.1LU19.1

Page 3: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-3

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

Sales, Excise, and Property Taxes#19#19Learning Unit ObjectivesProperty TaxLU19.2LU19.2

Page 4: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-4

Taxes 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

Page 5: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-5

Sales Tax

Compute sales tax and total price given the following

information:

Selling price of battery $32Shipping 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

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

Page 6: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-6

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 = $37,383.18 1.07

Check:

Sales $37,383.18 x .07 = $2,616. 82

$37,383.18 + 2,616.82 = $40,000

Page 7: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-7

Tax is based on a percentage of the retail price of a product or service

Excise Tax

Tax imposed on luxury items or nonessentials

Page 8: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-8

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

Page 9: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-9

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.

Page 10: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-10

Determining the Tax Rate

Tax Rate = Budget needed Total assessed value

Page 11: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-11

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

Page 12: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-12

Calculating Property Tax

1. Calculate assessed value of Bill’s home

.40 x $210,000 = $84,000

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 $176,000Market value of Bill’s home $210,000 Total assessed value $1,910,000

Page 13: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-13

Calculating Property Tax

a. .0922 = 9.22%b. .0922 x 100 = $9.22c. .0922 x 1000 = $92.20d. .0922 .001

= 92.2 Mills (or .0922 x 1,000)

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

Page 14: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-14

Calculating Property Tax

.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

4. Calculate the property tax due on Bill’s home in decimal, per $100, per $1,000, and in mills.

Page 15: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-15

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 .001x $100 $1,000 $63,000

630 x $6.48 63 x $64.80

$4,082.40 $4,082.40 $ 4,082.40 $ 4,082.40

Page 16: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-16

Problem 19-16:

$499, 094

$7,129,914= .007 x 1,000 = $70 per $1,000

Budget shortfall:$7,129,914

$1000= 7,129.92 x $60 = $427,795.20

$499,094.00 - $427,795.20 = $71,298.80 budget shortfall

Page 17: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-17

Problem 19-20:

$700,000

$110,000,000 = .0064

.0064

.001 = 6.40 mills

Page 18: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-18

Problem 19-22:

18.50 x .001 x $80,000 = $1,480

Page 19: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-19

Problem 19-23:

7.9 x .001 x $285,000 = $2,251.50

Page 20: Chapter 19 Sales, Excise, and Property Taxes Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

19-20

Problem 19-24:

Mills x .001 x A = $ 2,500

55 x .001 x A = $ 2,500

.055A = $ 2,500

A = $45,455


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