Comment
Don't put the tax in until the Merchant actually receives his money. That's what the government looks at in most places.
So take the discount first.
Problem 1
Step One
Find the discount
Original Price 109.50
26% discount = (26/100) * 109.50
26% discount = 28.47
Step Two
Take the discount away from the original selling price.
109.50
-28.47
======
81.03
Step 3
Find the 1% Tax
81.03 * 1/100 = 0.81
Step 4
Add this to the selling price.
81.03 + 0.81 = 81.84
Answer 81.84 <<<<<
Note:
There are other ways of doing this, but this way is the safest way.