Question

Using T accounts for Cash, Accounts Receivable, Sales Tax Payable, Sales, Sales Returns and Allowances, and Sales Discounts, enter the following sales transactions. Use a new set of accounts for each part, If required, round your answers to two decimal places.

5% sales tax, with returned merchandise.(a) Merchandise is sold on account for $400 plus sales tax.(b) Merchandise sold on account for $60 plus sales tax is returned for a credit.(c) Balance on account is received in cash.(d) Merchandise is sold for $260 cash plus sales tax.(e) $40 of merchandise sold for $260 cash plus sales tax is returned for a refund.

Answer 1

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Journal Entry
Account	Debit $	Credit $
Accounts Receivable	420.00
Sales		400.00
Sales tax payable		20.00
Sales Returns and Allowances	60.00
Sales tax payable	3.00
Accounts Receivable		63.00
Cash	357.00
Accounts Receivable		357.00
Accounts Receivable	273.00
Sales		260.00
Sales tax payable		13.00
Sales Returns and Allowances	40.00
Sales tax payable	2.00
Accounts Receivable		42.00

T accounts
Accounts Receivable
Account	Debit $	Account	Credit $
Sales	400.00	Sales Returns and Allowances	60.00
Sales tax payable	20.00	Sales tax payable	3.00
Sales	260.00	Cash	357.00
Sales tax payable	13.00	Sales Returns and Allowances	40.00
		Sales tax payable	2.00
		Closing Balance	231.00
	693.00		693.00
Cash
Account	Debit $	Account	Credit $
Accounts Receivable	357.00	Closing Balance	357.00
	357.00		357.00
Sales Returns and Allowances
Account	Debit $	Account	Credit $
Accounts Receivable	60.00	Closing Balance	100.00
Accounts Receivable	40.00
	100.00		100.00
Sales
Account	Debit $	Account	Credit $
Closing Balance	660.00	Accounts Receivable	400.00
		Accounts Receivable	260.00
	660.00		660.00
Sales tax payable
Account	Debit $	Account	Credit $
Accounts Receivable	3.00	Accounts Receivable	20.00
Accounts Receivable	2.00	Accounts Receivable	13.00
Closing Balance	28.00
	33.00		33.00