Question

Bargain Surplus made cash sales during the month of October of $375,000. The sales are subject to a 6% sales tax that was also collected. Which of the following would be included in the summary journal entry to reflect the sale transactions?

Debit Accounts Receivable for $375,000.
Credit Sales Taxes Payable for $21,226.
Credit Sales Taxes Payable for $22,500.
Credit Sales Revenue for $347,483.

Answer 1

Answer: The correct answer is "Credit Sales Taxes Payable for $22,500."

Explanation: To correctly reflect the sale transaction, we must take into account the generation of a 6% tax liability as a result of the sale.

375000 x 0,06 = $22500 tax.

So "Credit Sales Taxes Payable for $22,500" would be included in summary journal entry.