During December, Far West Services makes a $1,200 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. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Question

Gracelyn

Business

6 February, 03:02

During December, Far West Services makes a $1,200 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. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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Silas Pruitt · Answer 1

The journal entry is shown below:

Accounts receivable A/c Dr $1,302

To Sales A/c $1,200

To Sales tax payable $102

(Being sales and sales tax payable is recorded)

The computation of the sales tax payable is shown below:

= Credit sale * state sales tax rate + credit sale * local sales tax rate

= $1,200 * 6% + 1,200 * 2.5%

= $72 + $30

= $102