BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

JOURNALIZING SALES TRANSACTIONS Enter the following transactions in a general journal. Use a 6% sales tax rate.

May    1 Sold merchandise on account to J. Adams, $2,000 plus sales tax. Sale No. 488.
    4 Sold merchandise on account to B. Clark, $1,800 plus sales tax. Sale No. 489.
    8 Sold merchandise on account to A. Duck, $1,500 plus sales tax. Sale No. 490.
    11 Sold merchandise on account to E. Hill, $1,950 plus sales tax. Sale No. 491.

To determine

Journalize the transactions related to sales transactions.

Explanation

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Journalize the transactions related to sales transactions.

Transaction on May 1:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
May1Accounts Receivable, JA2,120
Sales2,000
Sales Tax Payable120
(Record credit sale)

Table (1)

Description:

  • Accounts Receivable, JA is an asset account. Since sales is made on account, the receivables increased, and an increase in asset is debited.
  • Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
  • Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Working Note 1:

Compute sales tax payable amount.

Sales tax payable = Sales×Sales tax percentage= $2,000×6%= $120

Working Note 2:

Compute accounts receivable amount (Refer to Working Note 1 for value of sales tax payable).

Accounts receivable, JA = Sales+Sales tax payable= $2,000+$120= $2,120

Transaction on May 4:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
May4Accounts Receivable, BC1,908
Sales1,800
Sales Tax Payable108
(Record credit sale)

Table (2)

Description:

  • Accounts Receivable, BC is an asset account. Since sales is made on account, the receivables increased, and an increase in asset is debited.
  • Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
  • Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Working Note 3:

Compute sales tax payable amount.

Sales tax payable = Sales×Sales tax percentage= $1,800×6%= $108

Working Note 4:

Compute accounts receivable amount (Refer to Working Note 3 for value of sales tax payable).

Accounts receivable, BC = Sales+Sales tax payable= $1,800+$108= $1,908

Transaction on May 8:

DateAccount Titles and ExplanationPost Ref

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

EXCHANGE GAINS AND LOSSES You are the vice president of International InfoXchange, headquartered in Chicago, Il...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)