Question

A retail store's Sales Account totals $223,000 which includes both the sales revenue and the sales tax on the sales. If the sales tax rate is 5%, what is the amount of the sales taxes owed to the taxing agency?

Answer 1

10619.05

Step-by-step explanation:

Sales without tax x (100%+sales tax rate) = sales with sales tax

sales without tax x 1.05 (100+5%) =223000

sales without tax = 223000/1.05

sales without tax = 212380.95

sales with sales tax - sales without sales tax = sales tax

223000-212380.95=10619.05

Answer 2

$10,619.05

Step-by-step explanation:

When sales is made at a tax rate of 5%, the entries to be posted in the proportion of the transaction amount

Dr Cash/ Accounts receivable 105%

Cr Sales revenue 100%

Cr Sales tax 5%

As such, if Sales Account totals $223,000 which includes both the sales revenue and the sales tax on the sales, it means that the accounts contains 105%, as such, the sales tax which is the amount owed the taxing agency

= 5/105 * $223,000

= $10,619.05