Question

Dextra Computing sells merchandise for $6,000 cash on September 30 (cost of merchandise is $3,900). The sales tax law requires Dextra to collect 5% sales tax on every dollar of merchandise sold. Record the entry for the $6,000 sale and its applicable sales tax. Also record the entry that shows the payment of the 5% tax on this sale to the state government on October 15.

Answer 1

Answer:

The Journal entries are as follows:

(i) On September 30,

Cash A/c ($6,000 + $300)   Dr. $6,300

To Sales                                                     $6,000

To sales tax payable                                 $300

(To record sales and 5% sales tax payable)

(ii) On September 30,

Cost of goods sold A/c     Dr.   $3,900

To merchandise inventory                     $3,900

(To transfer the cost to the finishing department)

(iii) On 15th October,

Sales tax payable A/c   Dr. $300

To cash                                           $300

(To record remittance of sales tax to the state government)