Elegant 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.

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

Solutions

Chapter
Section
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 12, Problem 6EA
Textbook Problem
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Elegant 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.

To determine

Concept introduction:

Journal Entry: In journal entry company records all the business transactions which are in monetary form. Company records the transaction on debit and credit in journal entry which are always equal. Sales tax is calculated as a percentage on the sale revenue and it is recorded as Sales tax payable under the current liabilities by the seller. The sales tax is collected by the seller along with the sales price from the buyer and it remain the liability for the seller until it is paid to the government.

To prepare:

The journal entries for the given transaction.

Explanation of Solution

The journal entries for the given transaction are explained is as follows:

 Journal entries Date Account Title Debit Credit Sept. 2 Accounts Receivable (450+15.75) \$ 465.75 Sales Revenue \$ 450.00 Sales Tax Payable (450x3.5%) \$ 15.75 (Being sales made on account and sales tax recorded) Sept...

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