Question

Julie Convenience Store sold merchandise for cash to a customer, and recorded a debit to Cash for $371, which included a 6% Sales tax. In the same transaction, they must also: A) credit Sales Revenue for 300 B) credit Sales Tax Payable for $22.26 C) credit Sales Tax Payable for $21 D) credit Sales Revenue for $371 E) credit Sales Revenue for $393.26

Answer 1

C) credit Sales Tax Payable for $21

Step-by-step explanation:

Based on the information given In the same transaction, they must also CREDIT SALES TAX PAYABLE FOR $21 Calculated as:

First step is to calculate the sales tax element

Sales tax element = $371*6/106

Sales tax element= $21

Now let calculate what the Price exclusive of sales tax would be

Price exclusive of sales tax=$371-$21

Price exclusive of sales tax= $350

The correct journal entry should be:

Dr Cash $371

Cr Sales revenue $350

($371-$21)

Cr Sales tax payable $21