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.

Question

Quizplus · Accepted Answer

The journal entry to record cash sales subject to sales tax is to debit Cash for the full amount received ($78,000 + $4,680 = $82,680), credit Sales for the amount of goods sold ($78,000), and credit Sales Taxes Payable for the amount of sales tax collected ($4,680).

Furniture World Is Required by Law to Collect and Remit