Question

Exercise 7.4 Recording sales made for cash and on account, with 8 percent sales tax, and sales returns. LO 7-1

Record the following transactions of Fashion Park in a general journal. Fashion Park must charge 8 percent sales tax on all sales.

DATE		TRANSACTIONS
2019
April	2	Sold merchandise for cash, $1,800 plus sales tax.
	3	The customer purchasing merchandise for cash on April 2 returned $150 of the merchandise; provided a cash refund to the customer.
	4	Sold merchandise on credit to Jordan Clark; issued Sales Slip 908 for $1,350 plus tax, terms n/30.
	6	Accepted return of damaged merchandise from Jordan Clark; issued Credit Memorandum 302 for $75 plus tax. The original sale was made on Sales Slip 908 of April 4.
	30	Received payment on account from Jordan Clark in payment of her purchase of April 4, less the return on April 6.

Answer 1

Credit Date Apr. 2 Accounts Debit Cash $1,944 Sale Revenue Sales Tax Payable (To record cash sales plus sales tax on it) $1,800 $144 ($1800 x 8%] Apr. 3 ($150 x 8%] Sales Returns and Allowances $150 Sales Tax Payable $12 Cash (To record sales returns plus sales tax on it) $162 Apr. 4 Accounts Receivable $1,458 Sale Revenue Sales Tax Payable (To record sales on account plus sales tax on it) $1,350 $108 ($1350 x 8%] Apr. 6 $75 $6 [$75 x 8%] Sales Returns and Allowances Sales Tax Payable Accounts Receivable (To record sales returns plus sales tax on it) $81 Apr. 30 $1,377 ($1458 - $81] Cash Accounts Receivable (To record collection of receivables) $1,377