Bargain Surplus made cash sales during the month of October of $225,000. The sales are subject to a 6% sales tax that was also collected. Which of the following would be included in the summary journal entry to reflect the sale transactions?

Question

Quizplus · Accepted Answer

The entry would include a debit to Cash for $225,000, a credit to Sales Revenue for $208,490 ($225,000 ÷ 1.06), and a credit to Sales Taxes Payable for the amount of sales tax collected, which is $13,500 ($225,000 x 6%). Therefore, choice D is the only one that correctly reflects the credit to Sales Taxes Payable.

Bargain Surplus Made Cash Sales During the Month of October