Question

Exercise 10-4 In providing accounting services to small businesses, you encounter the following situations pertaining to cash sales. 1. Furcal Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $28,700 and sales taxes $1,435. 2. Crystal Company does not segregate sales and sales taxes. Its register total for April 15 is $17,120, which includes a 7% sales tax.

Exercise 10-4 In providing accounting services to small businesses, you encounter the following situations pertaining to cash sales Furcal Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $28,700 and sales taxes $1,435. Crystal Company does not segregate sales and sales taxes. Its register total for April 15 is $17,120, which includes a 7% sales tax. Prepare the entries to record the sales transactions and related taxes for Crystal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare the entries to record the sales transactions and related taxes for Furcal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Exercise 10-4 In providing accounting services to small businesses, you encounter the following situations pertaining to cash sales Furcal Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $28,700 and sales taxes $1,435. Crystal Company does not segregate sales and sales taxes. Its register total for April 15 is $17,120, which includes a 7% sales tax. Prepare the entries to record the sales transactions and related taxes for Crystal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare the entries to record the sales transactions and related taxes for Furcal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the entries to record the sales transactions and related taxes for Furcal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Apr. 10

Exercise 10-4 In providing accounting services to small businesses, you encounter the following situations pertaining to cash sales Furcal Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $28,700 and sales taxes $1,435. Crystal Company does not segregate sales and sales taxes. Its register total for April 15 is $17,120, which includes a 7% sales tax. Prepare the entries to record the sales transactions and related taxes for Crystal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare the entries to record the sales transactions and related taxes for Furcal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Exercise 10-4 In providing accounting services to small businesses, you encounter the following situations pertaining to cash sales Furcal Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $28,700 and sales taxes $1,435. Crystal Company does not segregate sales and sales taxes. Its register total for April 15 is $17,120, which includes a 7% sales tax. Prepare the entries to record the sales transactions and related taxes for Crystal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare the entries to record the sales transactions and related taxes for Furcal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the entries to record the sales transactions and related taxes for Crystal Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Apr. 15

Answer 1

Concepts and reason

Accounting: Accounting is a process of recording the transactions, classifying them in a specific manner, and then it is the process of summarizing and analyzing to interpret the results. It is a process of preserving the accounts.

Transaction: Transaction is an act of buying or selling goods or rendering any service that is reliably measured in terms of money.

Journal entry: Journal entry is the recording of transactions in a systematic manner as they occur. Thus, it is a summary of all the transactions that has debit and credit aspects recorded chronologically.

Fundamentals

Golden rules of Accounting:

Sales revenue: The amount received by sale of goods or rendering services is known as sales revenue. This is the most earned revenue of a company. This is also called as sales revenue on gross. When gross sales revenue is deducted by any return, allowance, and discount, it is termed as net sales.

Cash sales: Cash received once the activity of sales commenced is known as cash sale. It is the payment received with ready cash during the sale. Sellers offer discount for such sale to encourage cash sales among customers or buyers.

Tax: A tax may be defined as an involuntary contribution from individuals or corporation as required by law, with the purpose of raising revenue for the functioning of the public and government of a state. The tax contribution by the tax payers is not directly related to the benefits or privileges received from the concerned government.

Rules for debit and credit:

When assets increase, debit them; when assets decrease, credit them.

When liabilities increase, credit them; when liabilities decrease, debit them.

When stockholders’ equity increases, credit it; when stockholders’ equity decreases, debit it.

When expenses and losses increase, debit them; when expenses and losses decrease, credit them.

When incomes and gains increase, credit them; when incomes and gains decrease, debit them.

1)

Prepare the journal entry to record the cash sale for “F” company:

Therefore, the cash account is debited for $30,135, sales revenue is credited for $28,700 and the sales tax payable is credited for $1,435.

2)

Prepare the journal entry to record the cash sales for “C” company:

Therefore, the cash account is debited for $17,120, sales revenue is credited for $16,000 and the sales tax payable is credited for $1,120.

Ans: Part 1

Part 2