# Sales tax transactions Journalize the entries to record the following selected transactions: a. Sold $62,800 of merchandise on account, subject to a sales tax of 5%. The cost of the merchandise sold was$37,500. b. Paid $39,650 to the state sales tax department for taxes collected. BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 #### Solutions Chapter Section Chapter 6, Problem 6.17EX Textbook Problem ## Sales tax transactionsJournalize the entries to record the following selected transactions: a. Sold$62,800 of merchandise on account, subject to a sales tax of 5%. The cost of the merchandise sold was $37,500. b. Paid$39,650 to the state sales tax department for taxes collected.

Expert Solution
To determine

Sales is an activity of selling the merchandise inventory of a business.

To Describe: The sales tax transactions.

### Explanation of Solution

(a)

Record the sale of merchandise inventory on account.

 Date Accounts and Explanation Debit ($) Credit ($) Accounts Receivable 65,940 (2) Sales Revenue 62,800 Sales Tax Payable 3,140 (1) (To record the sale of inventory on account with the sales tax)

Table (1)

Working Note:

Calculate the amount of sales tax payable.

Sales revenue = $62,800 Sales tax percentage = 5% Sales tax payable = Sales revenue × Sales tax percentage=$62,800×5%=$3,140 (1) Calculate the amount of accounts receivable. Sales revenue =$62,800

Sales tax payable = $3,140 Accounts receivable = Sales revenue +Sales tax payable=$62,800+$3,140=$65,940 (2)

Explanation

• Accounts Receivable is an asset and it is increased by $65,940. Therefore, debit accounts receivable with$65,940

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