During the month of June, Blue Boutique had cash sales of $312,440 and credit sales of $183,612, both of which include the 7% sales tax that must be remitted to the state by July 15. Prepare the adjusting entry that should be recorded to fairly present the June 30 financial statements. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Business

Jennifer Zavala

13 October, 06:10

During the month of June, Blue Boutique had cash sales of $312,440 and credit sales of $183,612, both of which include the 7% sales tax that must be remitted to the state by July 15. Prepare the adjusting entry that should be recorded to fairly present the June 30 financial statements. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Andres · Answer 1

sales revenue 32,452 debit

sales tax payable 32,452 credit

Explanation:

total sales:

cash sales: 312,440

credit sales 183,612

total 496,052

sales tax is 7%

So we have the following:

sales revenue x (1 + sales tax) = invoice nominal

so sales revenue: nominal / 1.07

496,052 / 1.07 = 463,600

now we can calculate sales tax by the difference or simply multiply by 7%

463,600 x 1.07 = 32,452‬

496,052 - 463,600 = 32,452

We will assume no sales tax entry was ever done along wiht the sales, so we will decrease revenue against sales tax payable.