Question

Merchandise is sold for cash. The selling price of the merchandise is $2,100, and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include a credit to:

a) Sales for $2,247

b) Cash for $2,247

c) Cash for $2,100

d) Sales Tax Payable for $147

Answer 1

The journal entry to record the sale of merchandise for cash which includes a 7% state sales tax on a $2,100 sale would include a credit to Cash for $2,247, which is the sum of the merchandise price and the sales tax.

Step-by-step explanation:

The correct journal entry to record the sale of merchandise for cash, including the state sales tax, would be to credit Cash for the total amount received, which is the price of the merchandise plus sales tax. To find the total amount of cash received, we need to calculate the sales tax by converting the sales tax rate from a percent to a decimal. For a merchandise price of $2,100 with a 7% sales tax, the calculation would be:

$2,100 × 0.07 = $147

The total amount of cash that needs to be credited is the sum of the selling price and the sales tax:

$2,100 + $147 = $2,247

Therefore, the correct journal entry would include a credit to Cash for $2,247.