A business sells $100,000 of products to a customer on account and collects 6% sales tax. Cost of the merchandise sold was $70,000. At the end of the month, the company pays the total sales tax collected ($185,000) to the state department of revenue. Required: Record the entries for (a) 'the sale' and for (b) 'the payment of the sales tax.' Indicate Dr. or Cr. in front of each account.
A business sells $100,000 of products to a customer on account and collects 6% sales tax. Cost of the merchandise sold was $70,000. At the end of the month, the company pays the total sales tax collected ($185,000) to the state department of revenue. Required: Record the entries for (a) 'the sale' and for (b) 'the payment of the sales tax.' Indicate Dr. or Cr. in front of each account.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 6RE: Smith Company is required to charge customers an 8% sales tax on all goods it sells. At the time of...
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A business sells $100,000 of products to a customer on account and collects 6% sales tax. Cost of the merchandise sold was $70,000. At the end of the month, the company pays the total sales tax collected ($185,000) to the state department of revenue.
Required:
Record the entries for (a) 'the sale' and for (b) 'the payment of the sales tax.' Indicate Dr. or Cr. in front of each account.
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