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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Sales tax

A sale of merchandise on account for $36,000 is subject to an 8% vales tax (a) Should the sales tax be recorded at the time of sale or when payment is received? (b) What is the amount recorded as sales? (c) What is the amount debited to Accounts Receivable? (d) What is the title of the account to which the $2.880 ($36,000 × 8%) is credited?

(a)

To determine

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

To Describe: Whether sales tax should recorded at the time of slae or at the time of payment.

Explanation

Record the sale of merchandise inventory on account.

Date Accounts and Explanation Debit ($) Credit ($)
  Accounts Receivable XX  
             Sales Revenue   XX
        ...

(b)

To determine

To Describe: The amount that should recorded as sales.

(c)

To determine

To Describe: The amount debited to accounts receivable.

(d)

To determine

To Describe: The the title of the account to which $2,880 is credited.

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