Question

In performing accounting services for small businesses, you encounter the following situations pertaining to cash sales. 1. Metlock, Inc. enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $34,500 and sales taxes $1,725. 2. Carla Vista Co. does not segregate sales and sales taxes. Its register total for April 15 is $24,804, which includes a 6% sales tax. Prepare the entries to record the sales transactions and related taxes for Metlock, Inc. and Carla Vista Co..

Answer 1

1. Metlock, Inc.

Dr Cash $36,225

Cr Sales revenue $34,500

Cr Sales Tax Payable $1,725

2. Carla Vista Co

Dr Cash $24,804

Cr Sales revenue $24,082

Cr Sales Tax Payable $722

Step-by-step explanation:

Preparation of the entries to record the sales transactions and related taxes for Metlock, Inc. and Carla Vista Co..

1. Metlock, Inc.

Dr Cash $36,225

($34,500+$1,725)

Cr Sales revenue $34,500

Cr Sales Tax Payable $1,725

2. Carla Vista Co

Dr Cash $24,804

Cr Sales revenue $24,082

($24,804/1.06)

Cr Sales Tax Payable $722

($24,804-$24,082)