Answered: determine the sales tax rate and how it…

Business

Accounting

determine the sales tax rate and how it is allocated to the State, Village, Cook County, and a Special District.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The city of Lakeland levies a 2 percent tax on the value of all restaurant meals served to the public within the city limits. This year, the aggregate value subject to tax was $31.3 million, so current year revenue was $626,000. Lakeland plans to decrease the tax rate next year to 1.5 percent. Required: Compute next year’s restaurant tax revenue assuming next year’s tax base equals the current year base. Compute next year’s restaurant tax revenue assuming next year’s tax base increases to $40.9 million. Compute next year’s restaurant tax revenue assuming next year’s tax base increases to $45.9 million.
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As the tax assessor for Indian Creek County, you have been informed that due to budgetary demands, a tax increase will be necessary next year. The total market value of the property in the county is $700,000,000. Currently, the assessment rate is 35% and the tax rate is 40 mills. The county commission increases the assessment rate to 55% and the tax rate to 45 mills. (a) How much property tax (in $) was collected under the old rates? $ (b) How much more tax (in $) revenue will be collected under the new rates? $
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The city of Lakeland levies a 2 percent tax on the value of all restaurant meals served to the public within the city limits. This year, the aggregate value subject to tax was $30.2 million, so current year revenue was $604,000. Lakeland plans to decrease the tax rate next year to 1.5 percent. Required: Compute next year’s restaurant tax revenue assuming next year’s tax base equals the current year base. Compute next year’s restaurant tax revenue assuming next year’s tax base increases to $38.3 million. Compute next year’s restaurant tax revenue assuming next year’s tax base increases to $43.3 million.
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