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16 October, 13:40

Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $4,500 of cash sales that are subject to an 6% sales tax, what is the journal entry to record the cash sales

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  1. 16 October, 16:45
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    Debit Cash $4,770

    Credit Sales $4,500

    Credit Sales Taxes Payable 270

    Explanation:

    Preparation of the journal entry to record the cash sales for Cantrell Company

    Debit Cash $4,770

    Credit Sales $4,500

    Credit Sales Taxes Payable 270

    Explanation:

    Since Cantrell Company is been required to receive and remit the sales taxes in which If Cantrell has $4,500 of cash sales that are subject to an 6% sales tax this means we have to Debit Cash $4,770, Credit Sales $4,500 and Credit Sales Taxes Payable 270.

    The Sales Taxes Payable will be:

    Sales * Sales Tax Rate

    Sales Taxes Payable = $4,500 * 0.06 = $270

    (A Credit to Sales Taxes Payable)

    The Cash Received will be:

    Sales + Sales Taxes Payable

    Cash Received = $4,500 + $270 = $4,770

    (A Debit to Cash)
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