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23 December, 09:28

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.

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  1. 23 December, 12:23
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    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
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