Question

Peterson Company billed its customers a total of $840,000 for the month of November. The total includes a 5% state sales tax.

(a) Determine the proper amount of revenue to report for the month.
(b) Prepare the general journal entry to record the revenue and related liabilities for the month.

Answer 1

a. $800000

b. Account receivable Dr. 840000

To sales revenue 800000

To sales tax payable 40000

Step-by-step explanation:

a. Given the total billed amount = $840000

Sales tax = 5%

Total revenue for the month = 840000 x (100 / 105) = $800000

b. Account receivable Dr. 840000

To sales revenue 800000

To sales tax payable 40000