Answer:
15 July Debit Bank $10,000; Credit Sales revenue $9,600 and Credit Sales tax payable $400
15 July Debit Cost of goods sold $5,000; Credit Inventory $5,000
1 August Debit Sales tax payable $400; Credit Bank $400
Explanation:
15 July Debit Bank $10,000; Credit Sales revenue $9,600 and Credit Sales tax payable $400
15 July Debit Cost of goods sold $5,000; Credit Inventory $5,000
1 August Debit Sales tax payable $400; Credit Bank $400
The sales tax expense of $400 ($10,000 * 4%) is a liability to the company as it has to pay it over to government thus it cannot be recorded as sales revenue income. At the date of sale we recognize a sales tax payable liability of the amount that we would have to pay over to the government for that particular sale
