# Stork Enterprises delivers care packages for special occasions. They charge $45 for a small package, and$80 for a large package. The sales tax rate is 6%. During the month of May, Stork delivers 38 small packages and 22 large packages. A. What is the total tax charged to the customer per small package? What is the overall charge per small package? B. What is the total tax charged to the customer per large package? What is the overall charge per large package? C. How much sales tax liability does Stork Enterprises have for the month of May? D. What accounts are used to recognize this tax situation for the month of May? E. When Stork remits payment to the sales tax governing body, what happens to the sales tax liability?

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 12, Problem 2PA
Textbook Problem
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## Stork Enterprises delivers care packages for special occasions. They charge $45 for a small package, and$80 for a large package. The sales tax rate is 6%. During the month of May, Stork delivers 38 small packages and 22 large packages.A. What is the total tax charged to the customer per small package? What is the overall charge per small package?B. What is the total tax charged to the customer per large package? What is the overall charge per large package?C. How much sales tax liability does Stork Enterprises have for the month of May?D. What accounts are used to recognize this tax situation for the month of May?E. When Stork remits payment to the sales tax governing body, what happens to the sales tax liability?

To determine

(a)

Introduction:

A current liability is a debt or obligation due during the operating period of the company. A company has normally one year of the operating period.

A non-current liability is a long-term obligation having a due date in the subsequent periods.

To identify:

The total tax charged to the customer per small package and an overall charge per small package.

### Explanation of Solution

Computation of the total tax charged to the customer per small package and an overall charge per small package:

Total Tax=($45×38)×6%=$102

To determine

(b)

To identify:

The total tax charged to customer per large package and overall charge per large package.

To determine

(c)

To compute:

The total sales tax liability for the month of May.

To determine

(d)

To identify:

The accounts used to recognize the above transactions.

To determine

(e)

To identify:

The sales tax liability after remittance of sales tax to the governing body.

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