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calculate vat

  • 29-06-2007 1:12pm
    #1
    coolio_64
    Closed Accounts Posts: 346 ✭✭


    lets take for example that i sell a product for 1000 euro
    the vat on this product is 21%
    I would automatically assume that the vat owed on this item would be 210 euro
    i.e. divide 100 into 1000 and then multiply by 21

    sales value = 1000 euro
    vat on sales= 210 euro

    the accountant is telling me that the correct figure is 173.55
    how is this possible?


    what is the forumla to calculate target gp
    ie have a product at 1 euro and want a target gp of 20%

    thank you


Comments

  • #2
    Jackalb
    Closed Accounts Posts: 4 ✭Jackalb


    Your accountant is correct -

    to get the VAT content on 1000.00 gross you need to divide the 1000.00 by 1.21 = Net of Vat 826.44 X by 21% is 173.55

    Hope this helps.

    Sorry but I dont know how to calculate the GP.:)


  • #3
    Lump
    Registered Users, Registered Users 2 Posts: 10,984 ✭✭✭✭Lump


    What has this got to do with College Work?


  • #4
    coolio_64
    Closed Accounts Posts: 346 ✭✭coolio_64


    but why do you have to do it that way

    part of an assignment we had in dcu

    surely if someone asks you what is 21 % of 1000 euro you would say 210 euro

    its a bit confusing do ya think??


  • #5
    BlackWizard
    Registered Users, Registered Users 2 Posts: 3,282 ✭✭✭BlackWizard


    It is confusing alright. The question might of been worded badly.

    I have a PC. Dont care how much it costs to build. But I want to break into the 1000 euro PC market with it. How much should I sell the PC to the shops for? taking into account they add on 21% VAT?

    Obviously cant sell it for 1000 because they will add on VAT
    1000 * 100/121 = 826.45 (Price to sell to the shops)

    So when the shops go selling the PC, they add on 21% VAT.
    826.45 * 121/100 = 1000 (Price to sell to customers)

    Working out how much VAT is paid
    826.45 * 21/100 = 173.55

    Hope that helps. Its the kind of exam question that can take a few minutes to understand. Then another few to work out the answer.


  • #6
    Meadows
    Registered Users Posts: 255 ✭✭Meadows


    sorry for digging up this old post but because its no1 on google i felt obligated to clarify.

    ( 100 / ( 100 + [VAT Rate] ) * [Final Price] = [Pre-VAT Price]
    for example
    ( 100 / ( 100 + 17.5 ) ) * 84.99 = 72.33 (rounded)


    i was doing some php code, here it is

    $recordtax=( 100 / ( 100 + $vat ) * $finalcost);
    $recordtax=$finalcost-$recordtax;

    $recordtax is the vat that was added


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