Question

Marigold Corp. Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $8,400. All sales are subject to a 5% sales tax. Compute sales taxes payable. Sales taxes payable $ enter a dollar amount Make the entry to record sales taxes payable and sales. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Solution and Explanation:

The following calculation is made in order to find out the value of sales tax which is payable

Sales including the sales tax = $8,400  

Sales tax rate = 5%  

Sales Tax $[\ 8400 / 105 \% \times 5 \%]$ = $400  

Sales $[\ 8400 / 105 \% \times 100 \%]$ = $8,000  

Sales Tax payable = $400  

The following Journal Entry will be passed in the books of accounts  

Date Account Title              Debit Credit

Mar 16 Cash                   $8,400  

     Sales                                    $8,000

   Sales Tax Payable                       $40