Question

I need to know who is correct or not in PART C, please help!!!

Answer 1

Answer:

  Both are correct with respect to the final purchase price.

  Lisa is correct, in terms of appropriate accounting procedure

Step-by-step explanation:

The total amount paid by Lisa's method and by Ross's method will be the same. The multiplication factors in each case are (1-0.15) = 0.85 and (1 +0.08) =  1.08. The commutative property of multiplication tells you the product is the same, regardless of the order in which the factors are applied.

The order of application of tax and discount does not matter for the final price.

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As a practical matter, Lisa is correct. The store will owe sales tax to the government based on the net sales of the store. If the cash register records the sale as $495, then extra accounting steps are required so the store can avoid paying tax on that amount. However, if the cash register records the sale as 15% less than $495, the tax paid to the government is easily justified.

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The attachment shows the intermediate computed values in both cases. The final value is the same.