A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $294,000, what is the amount of the sales taxes owed to the taxing agency?
A) $280,000
B) $294,000
C) $14,700
D) $14,000

Question

Quizplus · Accepted Answer

The sales revenue includes both the sales price and the sales tax. If $294,000 is the total, then $294,000 = Sales Price + 5% Sales Tax. Let Sales Price be X, then X + 0.05X = $294,000, which simplifies to 1.05X = $294,000. Solving for X gives X = $280,000. The sales tax is 5% of $280,000, which is $14,000.

A Retail Store Credited the Sales Revenue Account for the Sales