Question

Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $13,000 of cash sales that are subject to an 8% sales tax, what is the journal entry to record the cash sales?

Answer 1

Answer:  $1040

Explanation:

You would debit the accounts receivable for the entire amount of the sale.

then you would credit the sales account for the sales amount (minus the sales tax amount)

the add a credit to the sales tax liability account for the amount of sales taxes