Question

Exercise 9-2 Recording known current liabilities LO C2 

.1. On July 15, Piper Co. sold $25,000 of merchandise (costing $12,500) for cash. The sales tax rate is 5%. On August 1, Piper sent the sales tax collected from the sale to the government. Record entries for the July 15 and August 1 transactions.

2. On November 3, the Milwaukee Bucks sold a six game pack of advance tickets for $750 cash. On November 20, the Bucks played the first game of the six game pack (this represented one-sixth of the advance ticket sales). 

 

Answer 1

Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	July , 15	Cash	$26,250
		Sales Revenue		$25,000
		Sales Tax Payable ($ 25,000 X 5%)		$1,250
		(record the entry of cash sales and sales taxes)
2	July , 15	Cost of Goods Sold	$12,500
		Inventory		$12,500
		(Record the cost of merchandise)
3	Aug, 01	Sales Tax Payable	$1,250
		Cash		$1,250
		(Record the sending of sales tax to the government)
4	Nov, 03	Cash	$750
		Unearned Revenue		$750
		(Record the sales In advance of games)
5	Nov, 20	Unearned Revenue ( $ 750 / 6)	$125
		Sales Revenue		$125
		(record the revenue earned on sales of tickets)