Question

Scenario:

You are the accounting clerk, for the Bergman Company. You use QBO, to maintain the accounting records, of the company.

Owen Desmond, the accounts payable clerk, from Sorenson Inc, a long-time customer, contacts you regarding some discrepancies, on an invoice they have just received. Mr. Desmond informs you that the invoice includes $4,790, of charges, for products and services. Mr. Desmond notes that a 10% sales tax has been added to the entire invoice balance. However, his records show the amount of services provided was $3,970 and the amount of products was $1,000.

Required:
1. Read the 4 Common Accounting Errors and How to Prevent Them article.

Answer 1

To resolve the discrepancy in the invoice, subtract the cost of products from the total invoice balance and calculate 10% of the cost of services.

In this scenario, Owen Desmond, the accounts payable clerk, contacts the accounting clerk of Bergman Company regarding discrepancies on an invoice they have received.

The invoice includes $4,790 of charges for products and services, with a 10% sales tax added to the entire invoice balance.

However, Owen's records show that the amount of services provided was $3,970 and the amount of products was $1,000.

To calculate the correct sales tax, you can subtract the cost of products from the total invoice balance ($4,790 - $1,000 = $3,790). Then, you can calculate 10% of the cost of services ($3,970 x 0.10 = $397).

Therefore, the correct sales tax amount should be $397, not $479.