Loong Industries sells materials on March 16 for $12,000 cash, subject to 8% sales tax. The cost of the materials sold is $5,700. The revenue portion of the transaction is recorded as:
A)Debit Cash $12,000; credit Sales Taxes Payable $960; credit Sales $11,040.
B)Debit Accounts Receivable $12,960; credit Sales $12,000; credit Sales Taxes Payable $960.
C)Debit Cash $12,960; credit Sales $12,000; credit Sales Taxes Payable $960.
D)Debit Sales $12,960; credit Cash $12,000; credit Sales Taxes Payable $960.
E)Debit Cash $12,960; credit Sales $12,960.

Question

Quizplus · Accepted Answer

The total cash received is $12,960, which includes the sales amount of $12,000 and the sales tax of $960 (8% of $12,000). Therefore, Cash is debited for $12,960, Sales is credited for $12,000, and Sales Taxes Payable is credited for $960.

Loong Industries Sells Materials on March 16 for $12,000 Cash