Question

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

Answer 1

Answer:

The journal entry is as follows:

Explanation:

September 30:

Recording the sale:

The cash that would be received = $5,000 + $5,000*3% = $5,150

Debit: Cash account  $5,150

Credit: Sales account $5,000

Credit: 3% sales tax $150 (since it is payable)

September 30

Adjusting the inventory

Debit: Cost of goods sold $3,000

Credit: Inventory account $3,000

October 15:

Paying sales tax to government

Debit sales tax  $150

Credit Cash account $150