Question

The following transactions took place at Five Flags Amusement Park during May. Five Flags Amusement Park must charge 8 percent sales tax on all sales: DATE TRANSACTIONS 20X1 May 1 Sold merchandise on account to Bill Gomez; issued Sales Slip 1015 for $1,250 plus 8 percent sales tax, terms n/30. 15 Recorded cash sales, $3,300 plus 8 percent sales tax. 31 Received payment on account due from Bill Gomez for the sale on May 1. Required: Record the above transactions in a general journal:

Answer 1

Answer and Explanation:

The journal entries are given below:

On May 1  

Accounts receivable $1,300

      To sales revenue  $1,250

       To Sales tax liability   ($1,250 ×8%) $100

(Being the sales is recorded on account)

On May 15  

Cash  $3,564

        To Sales revenue  $3,300

        To Sales tax liability  ($3,300 ×8%) $264

(Being the sales is recorded on account)

On May 31

Cash $1,300

       To Account receivable $1,300

(Being received payment on account due is recorded)