Question

Exercise 10-03 (Video) In performing accounting services for small businesses, you encounter the following situations per taining to cash sales. 1. 2. Monty Corp. enters sales and sales taxes separately in its cash register. On April 10, the register totals are sales $35,500 and sales taxes $1,775. Wildhorse Co. does not segregate sales and sales taxes. Its register total for April 15 is $26,892, which includes a 8% sales tax. Prepare the entry to record the sales transactions and related taxes for each client. (Credit account titles are automatically indented when amoun not indent manually.) No. Date Debit Credit Account Titles and Explanation Monty Corp. Wildhorse Co.

Answer 1

Solution

No.	Date	Accounts title and explanation (Monty corp)	Debit	Credit
1	Apr-10	Cash	$ 37,275.00
		Sales revenue		$ 35,500.00
		Sales tax payable		$    1,775.00
		(To record sales)
No.	Date	Accounts title and explanation (Wildhorse Co.)	Debit	Credit
2	Apr-15	Cash	$ 26,892.00
		Sales revenue		$ 24,900.00*
		Sales tax payable		$    1,992.00**
		(To record sales)

*Sales revenue is included in cash receipt so sales will be (26892/108 x 100)

**Sales tax payable = (26892/108 x 8)