Question

A contractor supplied a number of computer to a schools. If the total bill is 252000 included VAT at 5%. Calculate how much the government receives as VAT.

Answer 1

To find out how much the government receives as VAT from the total bill of 252,000 that includes VAT at 5%, we can follow these steps:

1. **Identify the VAT Rate**: The VAT rate is 5%, which means the total bill includes both the cost of the computers and the 5% VAT.

2. **Calculate the Cost Before VAT**: We can use the following formula to find the cost before VAT:

\[
\text{Cost before VAT} = \frac{\text{Total Bill}}{1 + \text{VAT rate}}
\]

In this case:

\[
\text{Cost before VAT} = \frac{252,000}{1 + 0.05} = \frac{252,000}{1.05}
\]

\[
\text{Cost before VAT} = \frac{252,000}{1.05} = 240,000
\]

3. **Calculate the VAT Amount**: Now, we can calculate the VAT amount by subtracting the cost before VAT from the total bill:

\[
\text{VAT Amount} = \text{Total Bill} - \text{Cost before VAT}
\]

Alternatively, we can also calculate it directly from the cost before VAT:

\[
\text{VAT Amount} = \text{Cost before VAT} \times \text{VAT rate} = 240,000 \times 0.05
\]

\[
\text{VAT Amount} = 12,000
\]

So, the government receives **12,000** as VAT from the total bill.