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Raney Co.is a retail store operating in a state with a 6% retail sales tax.The retailer may keep 2% of the sales tax collected.Raney Co.records the sales tax in the Sales account.The amount recorded in the Sales account during May was $148,400.
-The amount of sales taxes (to the nearest dollar) for May is
A)$8,726.
B)$8,400.
C)$8,904.
D)$9,438.

Question

Use the following information for questions 
Raney Co.is a retail store operating in a state with a 6% retail sales tax.The retailer may keep 2% of the sales tax collected.Raney Co.records the sales tax in the Sales account.The amount recorded in the Sales account during May was $148,400.
-The amount of sales taxes (to the nearest dollar) for May is
A)$8,726.
B)$8,400.
C)$8,904.
D)$9,438.

Quizplus · Accepted Answer

First, we need to find the total amount of sales including the sales tax. 
Let X be the total sales amount, then we have:
X = amount recorded in Sales account / (1 + sales tax rate)
X = 148,400 / 1.06 = 140,000
Next, we need to find the sales tax amount:
Sales tax amount = X * sales tax rate
Sales tax amount = 140,000 * 0.06 = 8,400
However, since the retailer may keep 2% of the sales tax collected, the actual sales tax amount recorded in the Sales account is:
Actual sales tax amount = Sales tax amount - (Sales tax amount * 0.02)
Actual sales tax amount = 8,400 - (8,400 * 0.02) = 8,208
Therefore, the closest answer to the actual sales tax amount is B) $8,400.

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