1-1. 1-2 Chapter 19 Sales, Excise, and Property Taxes McGraw-Hill/Irwin Copyright © 2003 by The...
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Transcript of 1-1. 1-2 Chapter 19 Sales, Excise, and Property Taxes McGraw-Hill/Irwin Copyright © 2003 by The...
1-2
Chapter 19Chapter 19
Sales, Excise, and Sales, Excise, and Property TaxesProperty Taxes
McGraw-Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
1-3
• Compute sales tax on goods sold involving trade and cash discounts and shipping charges
• Explain and calculate excise tax
Sales, Excise, and Property Taxes#19#19Learning Unit Objectives
Sales and Excise TaxesLU19.1LU19.1
1-4
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
1-5
Sales Tax
Compute sales tax and total price given the following
information:
Selling price of computer $700Shipping charge $10.00
Trade discount 5%Sales Tax 5%
Net Price
$700 x.05 = $35
$700 - $35 = $665
Sales Tax
$665 x .05 = $33.25
Cost $665.00
Tax 33.25
Shipping 10.00
Total $708.25
1-6
Calculating Actual Sales
Actual sales = Total sales 1 + tax rate
Register receipts total $5,000 for the day, which included a 6% sales tax. What are
actual sales?
$5,000 = $4,716.98 1.06
Check:
Sales $4,716.98 x .06 = $283.02
$4,716.98 + $283.02 = $5,000
1-7
Tax is based on a percentage of the retail price of a product or service
Excise Tax
Imposed on luxury items or nonessentials
1-8
Excise Tax
Barbara Fu bought a Mercedes Benz for $80,000. Sales tax is 6% and excise
tax is 8%. What is her total cost?
Cost $80,000
Sales tax $80,000 x .06 = $4,800
Excise tax $80,000 x .08 = $6,400
Total cost $91,200
1-9
• Calculate the tax rate in decimal
• Convert tax rate in decimal to percent, per $100 of assessed value, per $1,000 of assessed value, and in mills
• Compute property tax due
Sales, Excise, and Property Taxes#19#19Learning Unit Objectives
Property TaxLU19.2LU19.2
1-10
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.
1-11
Step 2. Identify tax rate
Town budget needsTotal assessed value
Step 3. Calculate property tax due
Tax rate x assessed value
Step 1. Compute assessed value
Assessment rate x Market value
Calculating Property Tax
1-12
Calculating Property Tax
Town Budget $5,000,000
Market value of home $160,000
Assessed rate 25%
Total assessed values $65,000,000
*Rounded to nearest ten thousandth
$160,000 x .25 = $40,000
$5,000,000/$65,000,000 = .076923
$40,000 x .07692* = $3,076.80
1-13
Calculating Property Tax• The Town of Pliver has approved next year’s budget of
$1,355,000. The total property value in the town is $58,600,000. The State has determined their assessment ratio to be 95%. • What will next year’s tax rate be?• 1355/58600 =.0231• What will be the taxes on a home valued at
$150,000?• 150000 x .95 = 142500• 142500 x .0231 = 3291.75
1-14
Expressing Tax Rates
Per $100 of Per $1,000 of In
By percent assessed value assessed value mills
7.69% $100 x R% $1,000 x R% R / .001
$7.69 $76.90 76.90
$5,000,000/$65,000,000 = .076923
1-15
Expressing Tax Rates
Per $100 of Per $1,000 of In
By percent assessed value assessed value mills
7.69% $7.69 $76.90 76.90
Taxes on a home with a value of $40,000:
Per $100 of Per $1,000 of
By percent assessed value assessed value In mills
$40,000
x 7.69%
$3,076
$5,000,000/$65,000,000 = .076923
1-16
Expressing Tax Rates
Per $100 of Per $1,000 of In
By percent assessed value assessed value mills
7.69% $7.69 $76.90 76.90
Taxes on a home with a value of $40,000:
Per $100 of Per $1,000 of
By percent assessed value assessed value In mills
$40,000 $40,000 / 100
x 7.69% = $400
400 x $7.69
$3,076 $3,076
$5,000,000/$65,000,000 = .076923
1-17
Expressing Tax Rates
Per $100 of Per $1,000 of In
By percent assessed value assessed value mills
7.69% $7.69 $76.90 76.90
Taxes on a home with a value of $40,000:
Per $100 of Per $1,000 of
By percent assessed value assessed value In mills
$40,000 $40,000 / 100 $40,000 / 1000
x 7.69% = $400 = 40
400 x $7.69 40 x 76.90
$3,076 $3,076 $3,076
$5,000,000/$65,000,000 = .076923
1-18
Expressing Tax Rates
Per $100 of Per $1,000 of In
By percent assessed value assessed value mills
7.69% $7.69 $76.90 76.90
Taxes on a home with a value of $40,000:
Per $100 of Per $1,000 of
By percent assessed value assessed value In mills
$40,000 $40,000 / 100 $40,000 / 1000$40,000
x 7.69% = $400 = 40 x .001
400 x $7.69 40 x 76.90 x 76.90
$3,076 $3,076 $3,076 $3,076
$5,000,000/$65,000,000 = .076923