Question

Journalize the entries to record the following selected transactions:

Answer 1

Answer:

   General Ledger                   Dr.          Cr.

1.   Cash                                 $65,940

    Sales Tax Payable                           $3,140

    Sales                                                 $62,800

2.  Cost of Goods Sold        $37,500

    Merchandise Inventory                    $37,500

3.  Sales Tax Payable          $39,650

    Cash                                                  $39,650

Explanation:

Sales tax is subject to 5% which is

Sales Tax  = $62,800 x 5% = $3,140

Total Cash received = $62,800 + $3,140 = $65,940

Cost of the merchandise sold is recorded in the cost of goods sold account.

Tax is paid in cash and Tax payable liability is reduced by a debit entry.