Question

On July 15, Piper Co. sold $18,000 of merchandise (costing $9,000) for cash. The sales tax rate is 4%. On August 1, Piper sent the sales tax collected from the sale to the government. Record entries for the July 15 and August 1 transactions.

Answer 1

To record the transaction on July 15, create a journal entry to debit Sales Revenue, credit Cost of Goods Sold, and credit Sales Tax Payable. To record the transaction on August 1, create a journal entry to debit Sales Tax Payable and credit Cash.

Step-by-step explanation:

To record the transaction on July 15, we need to create the following journal entry:

• Debit Sales Revenue: $18,000
• Credit Cost of Goods Sold: $9,000
• Credit Sales Tax Payable: $720 (4% of $18,000)

To record the transaction on August 1, we need to create the following journal entry:

• Debit Sales Tax Payable: $720
• Credit Cash: $720

This entry reflects the payment of the sales tax collected from the sale to the government.