Final answer:
Smart Touch Learning will record a journal entry for a $500 tablet sale with 4% sales tax by debiting Cash for $520 and crediting Sales Revenue for $500 and Sales Tax Payable for $20, reflecting the total income including sales tax.
Step-by-step explanation:
When recording the journal entry for this sale of a $500 tablet with a 4% sales tax rate, Smart Touch Learning will need to calculate the total amount received, which includes the sales tax. The amount of sales tax is computed by multiplying the price of the item by the sales tax rate. Therefore, the sales tax would be $500 × 0.04 = $20. Consequently, the total amount received from the customer is $500 (price of the tablet) + $20 (sales tax) = $520.
For the journal entry, Smart Touch Learning will debit Cash for $520 to represent the income received. They will credit Sales Revenue for $500 and Sales Tax Payable for $20.
This entry reflects the increase in assets from receiving cash and the obligation to pay the $20 in sales tax to the government. It also accurately records the revenue earned from the sale of the tablet, exclusive of tax.