Stellar Corporation made credit sales of $26,400 which are subject to 5% sales tax. The corporation also made cash sales which totaled $27,195 including the 5% sales tax. a. Prepare the entry to record Stellar's credit sales. b. Prepare the entry to record Stellar's cash sales.

The journal entries are shown below:

a. Account receivable A/c Dr $27,720

To Sales revenue A/c $26,400

To Sales tax payable A/c $1,320 ($26,400 * 5%)

(Being the credit sales is recorded)

b. Cash A/c Dr $27,195

To Sales revenue A/c $25,900 ($27,195 * 100 : 105)

To Sales tax payable A/c $1,295

(Being cash sales is recorded and the remaining balance is credited to the sales tax payable account)