Kathy's Corner Store has total cash sales for the month of $38,000 excluding sales taxes. If the sales tax rate is 8%, which journal entry is needed? (Ignore Cost of Goods Sold.)

Question

Quizplus · Accepted Answer

The total cash received includes sales tax, so Cash is debited for $41,040 ($38,000 + 8% of $38,000). Sales Revenue is credited for $38,000, and Sales Tax Payable is credited for $3,040 (8% of $38,000).

Kathy's Corner Store Has Total Cash Sales for the Month