Question #1

Ms. Pike, who lives in California, traveled to Oregon to purchase gold jewelry for $36,000. California has a 7.25 percent sales and use tax, while Oregon has no sales and use tax.

1. Compute the use tax that Ms. Pike owes to California on the jewelry purchased in Oregon.
2. Compute the use tax that Ms. Pike owes to California if she purchased the jewelry in New Mexico and paid that states 5.125 percent sales tax on the transaction.

Question #2

Querrey Incorporated and Ronno Incorporated conduct business in a foreign country that imposes a 3 percent VAT. Querrey produces entertainment videos at a $5.0 material cost per unit and sells the videos to Ronno for $8.0 per unit. Ronno sells the videos at retail for $9.6 per unit. This year, the combined efforts of Querrey and Ronno resulted in sales of 9.0 million videos to the public.

Compute the VAT for each corporation.

Note: Enter your answers in dollars not in millions of dollars.