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13 November, 01:01

During December, Far West Services makes a $1,600 credit sale. The state sales tax rate is 6% and the local sales tax rate is 2.5%. (Note: the sales tax amount is in addition to the credit sale amount.) Record sales and sales tax payable.

Journal Entry Worksheet

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  1. 13 November, 01:25
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    Journal Entry of Far West Services

    Dr Account Receivable 1,736

    (1,600+136)

    Cr Sales Revenue 1,600

    Cr Sales tax payable 136

    Explanation:

    Since Far West Services makes a $1,600 credit sale this means we have to Debit Account Receivable with 1,736 (1,600+136) and Credit Sales Revenue with 1,600 as well as Credit Sales tax payable with 136.

    Calculation of Sales tax payable

    State sales tax rate is 6% + Local sales tax rate is 2.5%. = 8.5%

    1,600 X 0.0825%

    = 136
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