Question

During the month of June, Rowling Boutique had cash sales of$233,200 and credit sales of $153,700, both of which include the 6%sales tax that must be remitted to the state by July 15.
Instructions

Prepare the adjusting entry that should be recorded to fairlypresent the June 30 financial statements.

Answer 1

Answer:

Cash sales = $233,200 × (100 ÷ 106)

                  = $220,000

Credit sales = $153,700 × (100 ÷ 106)

                  = $145,000

Sales tax revenue = ($220,000 + $145,000) × 6%

                              = $21,900

Therefore, the Journal is as follows:

Sales tax revenue A/c Dr. $21,900

To sales tax payable                       $21,900

(To record the sales tax payable)