Answered: State the accounting entries required…

State the accounting entries required if a business made sales on credit of $10,000, on which it must account for sales tax at the rate of 20%.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter15: Choice Of Business Entity—other Considerations

Section: Chapter Questions

Problem 72P

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

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State the accounting entries required if a business made sales on credit of $10,000, on which it must account for sales tax at the rate of 20%.

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