Carl's Video includes the amount of sales taxes collected directly in the price charged for merchandise, and the total amount is credited to Sales.During January, Sales was credited for $239, 680.The January 31 adjusting entry to account for a 7% state sales tax should be
A)
Sales $\quad 15,680$
Sales Taxes Payable $\quad 15,680$
B)
Sales Tax Expense $\quad 15,680$
Sales Taxes Payable $\quad\quad\quad 15,680$
C)
Sales $\quad 16,778$
Sales Taxes Payable$\quad\quad 16,778$
D)
$\begin{array}{cc}
\text { Sales Tax Expense } & 16,778 \
\text { Sales Taxes Payable } && 16,778
\end{array}$

Question

Quizplus · Accepted Answer

The correct adjusting entry to account for the sales tax involves reducing the Sales account and increasing the Sales Taxes Payable account by the amount of the sales tax collected. The total sales of $239,680 includes the 7% sales tax. To find the amount of sales tax, we first need to calculate the sales before tax. Let $x$ be the sales before tax, so $x + 0.07x = 239,680$, which simplifies to $1.07x = 239,680$. Solving for $x$ gives the sales before tax, and $0.07x$ gives the sales tax amount. However, the calculation provided in the choices seems incorrect as none directly match this explanation, but the concept of adjusting Sales and increasing Sales Taxes Payable is correctly represented in option A.

Carl's Video Includes the Amount of Sales Taxes Collected Directly 15,680\quad 15,68015,680

Carl's Video Includes the Amount of Sales Taxes Collected Directly $\quad 15,680$