Sales revenue for Joe's Sporting Goods for the current period amounted to $215,000. Joe's Sporting Goods records GST when merchandise is sold. All sales are on account. The GST rate is 5%. The journal entry would include a debit to:

Question

Quizplus · Accepted Answer

DThe correct journal entry to record the sales revenue for Joe's Sporting Goods, which includes GST, would involve debiting Accounts Receivable for the total amount including GST ($215,000 + 5% of $215,000 = $225,750) and crediting Sales Revenue for the amount before GST ($215,000). This is because the GST collected from customers is not part of the sales revenue but is instead a liability to the government, which is why option C is incorrect. Option A is incorrect because it does not include the GST in the Accounts Receivable.

Sales Revenue for Joe's Sporting Goods for the Current Period