A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $630,000, what is the amount of the sales taxes owed to the taxing agency?
A) $600,000
B) $630,000
C) $31,500
D) $30,000

Question

Quizplus · Accepted Answer

The sales revenue includes both the sales price and the sales tax. To find the sales tax, divide the total sales revenue by 1.05 (since 5% is the tax rate) to find the sales price, then subtract this from the total sales revenue. $630,000 / 1.05 = $600,000 (sales price), so $630,000 - $600,000 = $30,000 (sales tax).

A Retail Store Credited the Sales Revenue Account for the Sales