Question

Andre Company does not segregate sales and sales taxes when it charges customers at the register. Its register total for a given day is $5,724, which includes a 6% sales tax. How much should be recognized as sales revenue and sales taxes payable, respectively?

Answer 1

Sales revenue is $5,400

Sales tax payable is $324

Step-by-step explanation:

The computation of the sales revenue is shown below:

= Total cash received by the company ÷ ( 1 + sales tax rate)

= $5,724 ÷ ( 1 + 6%)

= $5,724 ÷ 1.06

= $5,400

Now the sales tax payable would be

= Total cash received by the company - sales revenue

= $5,724 - $5,400

= $324

Simply we find the sales revenue by considering the sales tax rate and the difference of cash received and sales revenue represent the sales tax payable amount