1.) Sales Tax: Sales tax on the purchase of a vehicle is calculated on the net purchase price (which is the total purchase price minus the amount allowed by a dealer for any trade-in). The rate of tax for residents in Denver, CO is as follows:
?Colorado state tax: 2.90%
?Regional transportation district (RTD) tax: 1.20%
?Denver city tax: 3.62%
Using the information above, answer the following:
What is the total sales tax to be paid in 2002 on the purchase of a 2002 passenger vehicle with a sales price of $17,000 and a $2,000 trade-in allowance?
How would the sales tax be distributed between the state, the RTD, and the city?
2.) Property Tax: Which job should you take? After completing your degree, you have a choice between 2 jobs. Suppose that you do not have a preference in location and have been given the following offers:
?The first position is in Pennsylvania, earning $50,000 a year. You found a starter duplex that you can purchase with the assessed value of $75,000. Property taxes average 2.975% of the purchase price. The state sales tax is 6% on purchases, but this does not apply to food and clothing. The state income tax is 3%.
?The second offer is in Maryland. You would earn $65,000, with a starter duplex assessed at $135,000. In Maryland, property taxes are 2.4% of the purchase price of the property. The sales taxes are 1% higher than in Pennsylvania, and it also applies to food and clothing. Maryland's state income tax is 1.5% higher than Pennsylvania's.
You estimate your annual purchases are approximately $18,000, plus an additional $6,000 in food and clothing.
?What is the difference in cost of living between the 2 locations based on the differences in sales tax, income tax, and property tax?
?What factors will you consider when deciding which job to choose?
?What would be the better offer for you? Why? Explain in detail.
The sales tax on a vehicle purchase is determined.
Completing a Balance Sheet
for the year 31st dec.
particulars Debit credit
Petty cash 280.71
accounts receivable 0.00
Merchandise Inventory 11,762.10
office supply inventory 379.02
prepaid rent 2,000.00
accumulated depreciation - vehicles 17,416.52
accumulated depreciation - equipment 15,514.40
Office Furniture and Equipment 6,125.04
Accumulated Depreciation—Office Furn. and Equip 3,913.22
Accounts Payable 5,830.00
Payroll Payable 7,044.00
Federal Income Tax Payable 722.00
Social Security Tax Payable 627.44
Medicare Tax Payable 146.74
State Income Tax Payable 310.69
City Income Tax Payable 101.2
FUTA Tax Payable 1,050.56
SUTA Tax Payable 7,091.28
Sales Tax Payable 3,750.00
Ian Smith, Capital 94,938.80
Ian Smith, Drawing 5000
Sales Returns and Allowances 150
Sales Discounts 9155.75
COGS—Cost of Goods Sold 2612.9
Purchase Returns and Allowances 0
Purchase Discounts 0
Payroll Expense 5860
Payroll Tax Expense 860
Advertising Expense 10050
Rent Expense 2000
Office Supplies Expense 2673.29
Telephone Expense 1500.35
Utilities Expense 1170
Supplies Expense 725
Miscellaneous Expense 275
Depreciation Expense 500
Cash Short and Over 0
Expense and Revenue Summary 2110