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Chapter 11: Q14E (page 607)

Consider the following transactions of Sapphire Software: Mar. 31 Recorded cash sales of $230,000, plus sales tax of 7% collected for the state of New Jersey. Apr. 6 Sent March sales tax to the state. Journalize the transactions for the company. Ignore cost of goods sold.

Short Answer

Expert verified
  • Cash is debited with $246,100. Sales revenue and tax payable credited with $230,000 and $16,100.
  • Sales tax payable debited with $16,100 and cash is credited with $16,100.

Step by step solution

01

Calculation of sales tax

SalesTaxPayable=Sales×TaxRate=$230,000×7%=$16,100

02

Journal entry:

Date

Accounts and explanation

Debit

Credit

March 31

Cash

$246,100

Sales revenue

$230,000

Sales tax payable

$16,100

(To record cash sales and sales tax. payable)

April 6

Sales tax payable

$16,100

Cash

$16,100

(To record cash payment for sales tax payable.)

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Most popular questions from this chapter

The following transactions of Philadelphia Pharmacies occurred during 2017 and 2018:

2017

Jan. 9 Purchased computer equipment at a cost of \(7,000, signing a six-month, 8% note payable for that amount.

29 Recorded the week’s sales of \)68,000, three-fourths on credit and one-fourth for cash. Sales amounts are subject to a 6% state sales tax. Ignore cost of goods sold.

Feb. 5 Sent the last week’s sales tax to the state.

Jul. 9 Paid the six-month, 8% note, plus interest, at maturity.

Aug. 31 Purchased merchandise inventory for \(3,000, signing a six-month, 10% note payable. The company uses the perpetual inventory system.

Dec. 31 Accrued warranty expense, which is estimated at 2% of sales of \)609,000.

31 Accrued interest on all outstanding notes payable.

2018

Feb. 28 Paid the six-month 10% note, plus interest, at maturity.

Journalize the transactions in Plymouth’s general journal. Explanations are not required.

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