Question

Given the following information: Gross sales $1,500,000 Items purchased from out of state vendors $20,000 Items purchased under certificate of resale but used $5,000 Food sales included in gross sales $300,000 Sales to federal government included in gross $25,000 Sales to non-profit organizations included in gross $10,000 Sales to governments outside of Tennessee included in gross $12,000 Local tax rate Knox County Amount subject to single article tax $16,000 What is the total sales tax (sum of the components)?

Answer 1

Sol - The calculation is as follows -

Tennessse sales tax = 7%

Food basic sales tax = 4%

State single tax rate = 2.75%

Local tax rate = 2.25%

Calculation of total Sales tax -

Total Gross sales is = $1,500,000

Tax on Food sales included in gross =$300,000 * 4% = $12,000

Tax on sale to Non profit organization = $10,000 * 7% = $700

Tax on sale to federal Govt.= $25,000 * 7% = $1,750

Amount subject to single tax = $16,000 * 2.75% = $440

Sale to Govt. Outside of tennesse = $12,000 * 2.25% = $270

balance sales tax = $(1,500,000 - 363,000) * 7% = $79,590

Total sales tax amount = $(12,000 + 700 + 1,750 + 440 + 270 +79,590) = $94,750

Therefore total sales tax amount is $94,750