Asked by Mercedes Guevara on Jun 10, 2024
Verified
Furniture World is required by law to collect and remit sales taxes to the state.If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax,what is the journal entry to record the cash sales?
A) Debit Cash $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
B) Debit Sales Taxes Payable $4,680; debit Cash $73,220; credit Sales $78,000.
C) Debit Cash $78,000; credit Sales $78,000; and record the taxes when paid.
D) Debit Cash $78,000; credit Sales $73,320; credit Sales Taxes Payable $4,680.
E) Debit Accounts Receivable $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
Sales Taxes Payable
The liability account used to record the sales tax collected from customers by a seller, which is due to be paid to the government.
Cash Sales
Transactions in which goods or services are paid for and received at the time of the sale, using cash or equivalent.
Sales Taxes
Taxes imposed by governments on the sale of goods and services.
- Comprehend the obligations for collecting and remitting sales tax.
Verified Answer
KS
Khamryn Simon-McdonaldJun 15, 2024
Final Answer :
A
Explanation :
The journal entry for cash sales subject to sales tax is to debit Cash for the total amount received, including the sales tax, and credit Sales for the amount of the merchandise sold and credit Sales Taxes Payable for the amount of the sales tax collected. Therefore, the correct entry is Debit Cash $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
Learning Objectives
- Comprehend the obligations for collecting and remitting sales tax.