Chapter 18.I, Problem 17RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Abby Duncan purchased a diamond necklace for $17,400 at Royal Jewelers. The stale sales tax is 8%, and the federal excise tax on this type of jewelry is 10% on amounts over $10,000.

a. What is the amount of the sales tax?

b. What is the amount of the federal excise tax?

c. What is the total purchase price of the necklace?

**(a)**

To determine

**To calculate:** The amount of sales tax on necklace when the retail price of necklace purchased by Abby Duncan is $17,400.

Explanation

**Given Information:**

The retail price of necklace purchased by Abby Duncan is $17,400 and the state sales tax is 8%. The federal excise tax on necklace is 10% on amounts over $10,000.

**Formula used:**

The sales tax is:

**Calculation:**

Consider the retail price of necklace purchased by Abby Duncan is $17,400 and the state sales tax is 8%.

The sales tax is:

**(b)**

To determine

**To calculate:** The amount of federal excise tax on necklace when the retail price of necklace purchased by Abby Duncan is $17,400.

**(c)**

To determine

**To calculate:** The total purchase price of necklace when the retail price of necklace purchased by Abby Duncan is $17,400.

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