Question

Exercise 13-5

During the month of June, Sage Boutique had cash sales of $183,750 and credit sales of $117,075, both of which include the 5% sales tax that must be remitted to the state by July 15.

Prepare the adjusting entry that should be recorded to fairly present the June 30 financial statements. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
June 30

Answer 1

Adjusting Entry:

Credit Date June 30 Account title and Explanation Debit Sales revenue $14,325 Sales tax payable [To record sales tax] $14,325

Calculations:

Total sales = Cash sales + Credit sales

= $183,750+$117,075

= $300,825

Sales tax payable = $300,825 x (5/105)

= $14,325