Question

Required information Exercise 7-4 Recognizing sales tax payable LO 7-2 (The following information applies to the questions displayed below. The following selected transactions apply to Topeca Supply for November and December 2018 November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month. 1. Cash sales for November 2018 were $65,500 plus sales tax of 8 percent. 2. Topeca Supply paid the November sales tax to the state agency on December 10, 2018 3. Cash sales for December 2018 were $79,000 plus sales tax of 8 percent. Exercise 7-4 Part a Required a. Show the effect of the above transactions on a statements model like the one shown as follows. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). If an element is not affected by the event, leave the cell blank. (Enter any decreases to account balances and cash outflows with a minus sign.) - - Assets Cash Event TOPECA SUPPLY Horizontal Statements Model Stockholder's Equity Income Statement Common Retamed Revenue - Expense - Net Income Stock Earnings Liabilities Sales Tax Payable Statement of Cash Flows

Answer 1

LAssets by Cash 1 70740 2. (5240) 85320 ToPECA SUPPLy Hozizental statement Model Liobilities + Shoebeldes, Equity F a ncome statement - Sales tax payablk Comp.stockit Reloned earning Revenue - Expenses lovet focome statement of Cash Flowe 5240 + 65500 65500 - 65500 | 70740 On (5240) (5240) 04 6320 79000 79000- 79000 85320 OA + + + 3 + +

☺ Amount of Total Sales tose paid in 2018 is $5,240 Amount of Total sales for collected in 2018 - > $ 5:240 + $6,320 z $ 11560

© Amboynt, of sales for Liability as a December 31, 2018 13: z $ 6,320 © Balance sheet