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%. Record sales and sales tax payable. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Question

Lowery

Business

24 May, 13:22

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%. Record sales and sales tax payable. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Tangles · Answer 1

Account Receivables 1,736 debit

Sales Revenue 1,600 credit

sales tax payable 136 credit

Explanation:

The company will charge to the 1,600 sale the sales tax:

1,600 x (0.06 state + 0.025 local) = 136

the salestax is levied in the consumer not the firm thus it is not an expense the company is just an intermediary between the government and the consumer.