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30 January, 06:21

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.

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  1. 30 January, 07:37
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    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)
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