Question

S&C Roofing had sales on account of $32,500 which were subject to state sales tax of 8%. The entry to record the sales would be to:

A. debit Accounts Receivable, $32,500; debit Sales tax payable, $2,600; credit Sales revenue, $35,100.

B. debit Accounts Receivable, $32,500; credit Sales revenue, $32,500.

C. debit Accounts Receivable, $35,100; credit Sale revenue, $35,100.

D. debit Accounts Receivable, $35,100; credit Sales revenue, $32,500; credit Sales tax payable, $2,600.

Answer 1

The entry to record the sales with an 8% sales tax on $32,500 is to debit Accounts Receivable for $35,100 and credit Sales Revenue for $32,500 and Sales Tax Payable for $2,600.

Step-by-step explanation:

The correct entry to record the sales for S&C Roofing, having sales on account of $32,500 with a state sales tax of 8%, is to debit Accounts Receivable for the total amount the customer owes (which is the sales amount plus the sales tax) and to credit Sales Revenue for the amount of the sales without tax, and credit Sales Tax Payable for the amount of the sales tax. According to the provided data, sales tax is calculated as 8% of $32,500, which equals $2,600. Therefore, the total amount receivable from the customer is $32,500 (sales) + $2,600 (sales tax) = $35,100. The correct journal entry is:

Debit Accounts Receivable $35,100

Credit Sales Revenue $32,500

Credit Sales Tax Payable $2,600