Question

Sales Tax Transactions

Journalize the entries to record the following selected transactions.

a. Sold $429,000 of merchandise on account, subject to a sales tax of 6%. The cost of the goods sold was $253,110.

If an amount box does not require an entry, leave it blank.

	Accounts Receivable
	Sales
	Sales Tax Payable
	Cost of Goods Sold
	Inventory

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(a) Two entries are required: (1) for the sale on account including sales tax (2) for the cost of the goods sold and inventory decrease on the seller's records.

b. Paid $43,530 to the state sales tax department for taxes collected.

If an amount box does not require an entry, leave it blank.

	Sales Tax Payable
	Cash

Answer 1

			(Amount in $)
(a)	Particulars	Debit	Credit
(1)	Accounts Receviable	454,740
	Sales		429,000
	Sales Tax Payable (429000*6%)		25,740
	(Being Sales Recorded on account)
(2)	Cost of Goods Sold	253,110
	Inventory		253,110
	(Being Cost of Goods Sold Recorded)
(b)	Sales Tax Payable	43,530
	Cash		43,530
	(Being Sales Tax paid to sales tax department)