Sales and Excise Tax
Garner’s Antique Hot Rods recently sold a 1957 Chevy for $75,000 on account. The state sales tax is 6%, and there is a $500-per-car federal excise tax.
Required:
Prepare the journal entry to record the sale.
Concept introduction:
Liabilities:
Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.
To prepare:
The journal entry to record the sale.
The journal entry to record the sale is explained as follows:
Journal Entries | |||
Date | Account Titles | Debit | Credit |
Accounts Receivable | $ 156,560,000 |
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