what is the correct VAT payable for a hi-fi unit costing £255.55 less trade discount of 10 and cash discount of 4 if paid within 14 days-delivered by courier at an agreed charge of £25.00 the courier charged the supplier £19.50?
To calculate the correct VAT payable for the hi-fi unit, we need to break down the costs and determine the taxable amount.
1. Calculate the taxable amount:
a) Start with the retail price of the hi-fi unit: £255.55
b) Apply the trade discount of 10%: £255.55 * 0.10 = £25.55
c) Deduct the trade discount from the retail price: £255.55 - £25.55 = £230.00
d) Deduct the cash discount of 4% for paying within 14 days: £230.00 * 0.04 = £9.20
e) Deduct the cash discount from the adjusted price: £230.00 - £9.20 = £220.80
2. Determine the courier charge:
a) Subtract the courier charge from the adjusted price: £220.80 - £25.00 = £195.80
3. Determine the VAT payable:
a) Calculate the VAT rate. In the UK, it is usually 20%, but VAT rates can vary for different goods and services. If the VAT rate is different, you need to adjust the calculation accordingly.
b) Calculate the VAT amount: £195.80 * 0.20 = £39.16
Therefore, the correct VAT payable for the hi-fi unit, after all discounts and delivery charges, is £39.16.