Question

A car yard had a sale. It advertised that it would pay the GST on all cars sold. The salesman subtracted 15% from the full GST inclusive price of $5999 in order to calculate the sale price. Explain why his boss was angry, and calculate what the sale price should have been.​

Answer 1

Answer: $5938.92

Explanation:

GST = original price * 10% = $5999 * 0.1 = $599.90

The total GST inclusive price would be the sum of the original price and the GST, which is:

GST inclusive price = original price + GST = $5999 + $599.90 = $6598.90

Sale price = (GST inclusive price + GST) * (1 - 10%) = ($6598.90 + $599.90) * 0.9 = $6598.80 * 0.9 = $5938.92

Therefore, the correct sale price should have been $5938.92, and the car yard should have paid the 10% GST on each sale, as advertised.