Question

S operates in a business environment with a 5% state sales tax rate and a 4% county sales tax rate. The state allows S to keep 2% of the sales tax it collects while the county requires S to remit 99% of the state sales tax it collects. During June, S recorded the sales taxes in its sales revenue account. S’s sales revenue account for June had a credit balance of $882,900. S prepares AJEs monthly. Assume S remits the June sales taxes to the state and the county on July 10. Prepare the entries S made (1) as of 06-30 to reflect the sales tax it will remit to the state and to the county and (2) on 07-10 to reflect the payment to the state and the county.

Answer 1

Solution Credit balance in sales = 882900 It Includez 5% state Sales Tax and 4% country sales Tax Hence Sales iş (99+5+4] = 108% State sales Tax of 2% can be retained by s, so keep Sales Tax to be remitted = 5% -2%. = 3% Country Sales Tax to be remitted = 3% State Sales Tax to be remitted in = (882900/108) X 3 =2452 Country Sulez Tax to be remitted = (882900/108) X3 = 24 52. Date Debit Credit 1-30-Jun 49050 24525 24525 Account title and explanation salez Sales Tax lability-state sales Tax Cablety - Country [Recording Sales Tax liability] Sales Tax labilety-state Slu Tax (Auty - Com cash [ payment of sales Tax lability] 10-Jun 24525 24525 49050