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1 December, 09:03

Hudson Hotel collects 15% in city sales taxes on room rentals, in addition to a $2 per room, per night, occupancy tax. Sales taxes for each month are due at the end of the following month, and occupancy taxes are due 15 days after the end of each calendar quarter. On January 3, Year 5, Hudson paid its November Year 4 sales taxes and its fourth quarter Year 4 occupancy taxes. Additional information pertaining to Hudson's operations is Year 4 Room Rentals Room Nights October $100,000 1,100 November 110,000 1,200 December 150,000 1,800 What amounts should Hudson report as sales taxes payable and occupancy taxes payable in its December 31, Year 4, balance sheet?

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  1. 1 December, 11:28
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    Answer: The correct answer is $54,000 and $8,200

    Explanation:

    First, we have to calculate the taxes (the tax rate is 15%)

    October : $100,000 * (15/100) = $15,000

    November: $110,000 * (15/100) = $16,500

    December : $150,000 * (15/100) = $22,500

    Total SalesTaxes $54,000

    Second, we calculate occupancy taxes (2$ per night)

    October: (number of nights) 1100*$ 2 = $2,200

    November: (number of nights) 1200*$ 2 = $2,400

    December: (number of nights) 1800*$ 2 = $3,600

    Total Occupancy taxes $8200
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