Final answer:
The statement 'To determine the amount of sales in such cases, divide total receipts by 100% plus the sales tax percentage' is misleading. To find the pre-tax sales amount, one should divide the total receipts by 1 plus the sales tax rate expressed as a decimal.
Step-by-step explanation:
To determine the amount of sales without tax from the total receipts including tax, you would not simply divide by 100% plus the sales tax percentage. Instead, you need to account for the fact that the sales tax is a percentage of the pre-tax amount. Here's how you can do it, given that total receipts is the final amount paid which includes the price of the item plus the sales tax.
Example: If the total receipts (including sales tax) amount to $154 and the sales tax rate is 10%, you would divide the total receipt by 1.10 (which represents 100% of the original price plus 10% sales tax) to get the pre-tax sales amount.
$154 ÷ 1.10 = $140
This means the amount of sales before tax was $140. Therefore, the correct way to determine the amount of sales before sales tax from total receipts is to divide the total receipts by 1 plus the sales tax rate expressed as a decimal.