Textbook Problem

Sales Taxes Mauldin Company makes sales on which a 5% sales tax is assessed. The following summary transactions were made during 2019:

1. 1. sales for cash of $1,665,400, excluding sales taxes
2. 2. sales on credit of $2,820,500, excluding sales taxes
3. 3. sales taxes of $168,220 were paid to the state government during 2019

Required:

1. 1. Prepare journal entries to record the preceding transactions.
2. 2. Show how the unpaid sales taxes would be reported on Mauldin’s December 31, 2019, balance sheet.