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15 August, 04:49

On February 13, a jewelry store sells an engagement ring with a sales price of $10,000 to a nervous young man, who pays in cash. The sale is subject to a 9.75 percent sales tax. Prepare the revenue portion of the February 13.

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  1. 15 August, 06:02
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    Revenue $10,000

    Journal Entry

    Dr. Cr.

    Cash $10,975

    Sales $10,000

    Sales Tax liability $975

    Explanation:

    Sales Tax = Sales price x sales tax rate = $10,000 x 9.75% = $975

    A business is subject to collect the sales tax on taxable goods / services from customer on behalf of government. It is calculated on predetermined tax rate. business collects the tax from customer and pays it to government.
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