Question

What is the account to which the $2,880 ($36,000 × 8%) is credited?

Options:
a. Sales Tax Payable
b. Accounts Receivable
c. Cash
d. Sales Revenue

Answer 1

The $2,880 calculated as 8% of $36,000 is credited to the Sales Tax Payable account, since this is a liability representing collected sales tax owed to the government.

Step-by-step explanation:

The amount of $2,880, which is 8% of $36,000, is typically credited to the Sales Tax Payable account. When a company collects sales tax, this amount is not an earning but is collected on behalf of the government, thus it is a liability until it's remitted to the government. The account that reflects this liability is the Sales Tax Payable account. Therefore, the correct answer to the question is: a. Sales Tax Payable.