Question

Journalizing Sales, Sales Returns and Allowances, and Cash Receipts

Aug. 4 Sold merchandise on account to S. Miller for $310 plus sales tax of 4%, with 2/10, n/30 cash discount terms.
6 Sold merchandise on account to K. Krtek for $160 plus sales tax of 4%.
10 S. Miller returned merchandise purchased on August 4 for $20 plus sales tax for credit.
13 S. Miller paid the balance due on her account.
15 K. Krtek returned merchandise purchased on August 6 for $40 plus sales tax for credit.
20 K. Krtek paid the balance due on his account.

Answer 1

Answer and Explanation:

The journal entries are shown below:

On August 4

Accounts Receivable (S. Miller) $322.40

To Sales Tax Payable ($310 × 4%) $12.40

To Sales Revenue $310

(Being the sales revenue recorded on account)

On August 6

Accounts Receivable (K. Krtek) $166.40

To Sales Tax Payable ($160 × 4%) $6.40

To Sales Revenue $160

(Being the sales revenue recorded on account)

On August 10

Sales Returns $20

Sales Tax Payable $0.80

To Accounts Receivable (S. Miller) $20.80

(Being the returned inventory is recorded)

On August 13

Cash Account $295.80

Cash Discount (($310 - $20) × 2%) $5.8

To Accounts Receivable (S. Miller) $301.60 ($322.40 - $20.80)

(Being receipt of cash is recorded)

On August 16

Sales Returns $40

Sales Tax Payable $1.60

To Accounts Receivable (K. Krtek) $41.60

(Being the return of goods is recorded)

On August 20:

Cash Account ($166.40 - $41.60) $124.80

To Accounts Receivable (K. Krtek) $124.80

(Being receipt of cash is recorded)