Question

During December, Rainey Equipment made a $658,000 credit sale. The state sales tax rate is 6% and the local sales tax rate is 1.5%. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

So starting out they purchase your equipment with a promissory note. That promissory note is Debited to your accounts receivable for the amount of sales price (658,000) + both sales & local taxes. 6%+1.5%= 7.5% so... 1+ (7.5%*658,000)= $707,350

then your sales tax payable is credited like this 7.5%*658,000= $49,350

and of course credit, the sales price for $658,000

Step-by-step explanation:

Accounts Receivable $707,350

Sales Revenue $658,000

Sales taxes payable $49,350

Good luck!

#JmackTheInstructor