Question

In providing accounting services to small businesses, you encounter the following independent situations:

1. Sainsbury rang up $12,300 of sales, plus HST of 13%, on its cash register on April 10.
2.Montgomery rang up $30,900 of sales, before sales taxes, on its cash register on April 21. The company charges 5% GST and no PST.
3.Winslow charges 5% GST and 7% PST on all sales. On April 27, the company collected $26,900 sales in cash plus sales taxes.

Answer 1

In order to calculate the total sales including taxes for Sainsbury, Montgomery, and Winslow, one must apply the specific tax rates to the base amount of sales to find the total amount paid by the customer. An example of such calculation would be adding an 8.25% tax to a $20.98 purchase, resulting in a total with tax.

Step-by-step explanation:

Calculating Sales Taxes and Total Sales

When calculating the total sales including taxes for small businesses, it is necessary to understand the percentage rate of the sales tax applicable in each scenario. Here we have three distinct scenarios with different tax rates:

• Sainsbury's had $12,300 of sales plus a 13% Harmonized Sales Tax (HST).
• Montgomery had $30,900 of sales with a 5% Goods and Services Tax (GST) added.
• Winslow collected $26,900, charging both 5% GST and 7% Provincial Sales Tax (PST).

To calculate the total amount the customer pays, we must add the sales taxes to the base sales amounts. The calculation is the base amount plus the product of the base amount and the sales tax rate, which is converted from a percentage to a decimal (e.g., 13% gets converted to 0.13).

For example, if you have an $8.99 item and a $11.99 item totaling $20.98 before tax, and the sales tax rate is 8.25%, you convert the rate to a decimal (0.0825) and multiply by the total cost to find the amount of sales tax.