Question

A state requires quarterly sales tax returns to be filed with the sales tax bureau by the 20th day following the end of the calendar quarter. however, the state further requires that sales taxes collected be remitted to the sales tax bureau by the 20th day of the month following any month such collections exceed $1,000. these payments can be taken as credits on the quarterly sales tax return. taft corporation operates a retail hardware store. all items are sold subject to a 6% state sales tax, which taft collects and records as sales revenue. the sales taxes paid by taft are charged against sales revenue. taft pays the sales taxes when they are due.

following is a monthly summary appearing in taft's first-quarter 2020 sales revenue account:
debit credit
january $0 $21,200
february 1,200 14,840
march 0 1 9,080
$1,200 $55,120

in its financial statements for the quarter ended march 31, 2020, taft's sales revenue and sales taxes payable would be: select one:
a. sales revenue sales taxes payable $52,000 $3,120
b. sales revenue sales taxes payable $53,920 $1,200
c. sales revenue sales taxes payable $55,120 $3,120
d. sales revenue sales taxes payable $52,000 $1,920

Answer 1

Taft Corporation's sales revenue for the quarter ended March 31, 2020, is $52,000, and the sales taxes payable is $1,920, following the calculation of sales and sales taxes collected for each month minus the debits paid. Therefore, the correct answer is: d. Sales revenue $52,000; Sales taxes payable $1,920.

Step-by-step explanation:

To calculate Taft Corporation's sales revenue and sales taxes payable, we need to consider the amount collected as sales at the 6% sales tax rate. For each month, we calculate the sales by dividing the total collected amount by 1.06. The sum of these amounts gives us the total sales revenue. The difference between the total amount collected and the sales revenue gives us the total sales tax collected. This amount, minus any sales taxes already paid (as debits), will give us the sales taxes payable at the end of the quarter.

• January: $21,200 / 1.06 = $20,000 sales; $1,200 taxes.
• February: $14,840 / 1.06 = $14,000 sales; $840 taxes.
• March: $19,080 / 1.06 = $18,000 sales; $1,080 taxes.

Adding the sales figures: $20,000 + $14,000 + $18,000 = $52,000 total sales. Adding the tax figures: $1,200 + $840 + $1,080 = $3,120 total taxes. Taft paid $1,200 in February, so the taxes payable at quarter-end are $3,120 - $1,200 = $1,920.

Therefore, the correct answer is: Sales revenue $52,000; Sales taxes payable $1,920.