Concept explainers
1.
Liabilities
Liabilities are the obligations of the business to pay the creditors and others, towards purchasing goods and services on account, and/or other financial benefits received. Liabilities can be short term (current liability) or long-term depending upon the time it is paid-off. While current liabilities are paid within one year, on the other hand, long-term liabilities are paid over one year period.
Rules of debit and credit:
“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.
Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.
To Journalize: The transaction to record the sale on July 5.
2.
To Journalize: The transaction to record the payment of sales tax to the state.
Want to see the full answer?
Check out a sample textbook solutionChapter 11 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (5th Edition)
- Smith Company is required to charge customers an 8% sales tax on all goods it sells. At the time of sale, Smith includes the combined amount of both sales and sales tax in the sales account. At the end of May, Smiths sales account for May has a credit balance of 540,000. Prepare the sales tax adjusting journal entry for the end of May.arrow_forwardSales Tax Cobb Baseball Bats sold 45 bats for $50 each, plus an additional state sales tax of 6%. The customer paid cash. Required: Prepare the journal entry to record the sale.arrow_forwardScrepcap Co. had the following transactions during the first week of June: June 1Purchased merchandise on account from Acme Supply, 2,700, plus freight charges of 160. 1Issued Check No. 219 to Denver Wholesalers for merchandise purchased on account, 720, less 1% discount. 1Sold merchandise on account to F. Colby, 246, plus 5% state sales tax plus 2% city sales tax. June 2Received cash on account from N. Dunlop, 315. 2Made cash sale of 413 plus 5% state sales tax plus 2% city sales tax. 2Purchased merchandise on account from Permon Co., 3,200, plus freight charges of 190. 3Sold merchandise on account to F. Ayres, 211, plus 5% state sales tax plus 2% city sales tax. 3Issued Check No. 220 to Ellis Co. for merchandise purchased on account, 847, less 1% discount. 3Received cash on account from F. Graves, 463. 4Issued Check No. 221 to Penguin Warehouse for merchandise purchased on account, 950, less 1% discount. 4Sold merchandise on account to K. Stanga, 318, plus 5% state sales tax plus 2% city sales tax. 4Purchased merchandise on account from Mason Milling, 1,630, plus freight charges of 90. 4Received cash on account from O. Alston, 381. 5Made cash sale of 319 plus 5% state sales tax plus 2% city sales tax. 5Issued Check No. 222 to Acme Supply for merchandise purchased on account, 980, less 1% discount. Required 1. Record the transactions in a general journal. 2. Assuming these are the types of transactions Screpcap Co. experiences on a regular basis, design the following special journals for Screpcap: (a) Sales journal (b) Cash receipts journal (c) Purchases journal (d) Cash payments journalarrow_forward
- SALES JOURNAL T. M. Maxwell owns a retail business and made the following sales during the month of July 20--. There is a 5% sales tax on all sales. July 1Sale No. 101 to Saga, Inc., 1,200, plus sales tax. 8Sale No. 102 to Vinnie Ward, 2,100, plus sales tax. 15Sale No. 103 to Dvorak Manufacturing, 4,300, plus sales tax. 21Sale No. 104 to Vinnie Ward, 1,800, plus sales tax. 24Sale No. 105 to Zapata Co., 1,600, plus sales tax. (Open a new account for this customer. Address is 789 N. Stafford Dr., Bloomington, IN 474016201.) 29Sale No. 106 to Saga, Inc., 1,450, plus sales tax. Required 1. Record the transactions in the sales journal. Total and verify the column totals and rule the columns. 2. Post the sales journal to the general ledger and accounts receivable ledger accounts. Use account numbers as shown in the chapter.arrow_forwardElegant Electronics sells a cellular phone on September 2 for $450. On September 6, Elegant sells another cellular phone for $500. Sales tax is computed at 3.5% of the total sale. Prepare journal entries for each sale, including sales tax, and the remittance of all sales tax to the tax board on October 23.arrow_forwardMonster Drinks sells twenty-four cases of beverages on October 18 for $120 per case. On October 25, Monster sells another thirty-five cases for $140 per case. Sales tax is computed at 4% of the total sale. Prepare journal entries for each sale, including sales tax, and the remittance of all sales tax to the tax board on November 5.arrow_forward
- Record the following transactions in general journal form. a. Sold merchandise on account to A. Bauer, 680 plus 54.40 sales tax (invoice no. D446). b. Bauer returned 105.50 of the merchandise. Issued credit memo no. 114 for 113.94 (105.50 for the amount of the sale plus 8.44 for the amount of the sales tax).arrow_forwardSALES TRANSACTIONS J. K. Bijan owns a retail business and made the following sales on account during the month of August 20--. There is a 6% sales tax on all sales. REQUIRED 1. Record the transactions starting on page 15 of a general journal. 2. Post from the journal to the general ledger and accounts receivable ledger accounts. Use account numbers as shown in the chapter.arrow_forward
- College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College