Lippman Company Ltd. collects 5% GST on sales. If sales are $963,000, the proper accounting includes:
A)$101,115 credit to Sales.
B)$48,150 credit to GST Payable.
C)$48,150 debit to GST Recoverable.
D)$963,000 debit to Accounts Receivable.

Question

Quizplus · Accepted Answer

The GST collected on sales is 5% of $963,000, which equals $48,150. This amount should be credited to GST Payable, as it represents the tax collected from customers that the company needs to remit to the government.