Question

On February 13, a jewelry store sells an engagement ring with a sales price of $10,000 to a nervous young man, who pays in cash. The sale is subject to a 9.75 percent sales tax. Prepare the revenue portion of the February 13.

Answer 1

Revenue $10,000

Journal Entry

Dr. Cr.

Cash $10,975

Sales $10,000

Sales Tax liability $975

Step-by-step explanation:

Sales Tax = Sales price x sales tax rate = $10,000 x 9.75% = $975

A business is subject to collect the sales tax on taxable goods / services from customer on behalf of government. It is calculated on predetermined tax rate. business collects the tax from customer and pays it to government.