In performing accounting services for small businesses, you encounter the following situations per taining to cash sales. 1. Poole Company enters sales and sales taxes separately in its cash register. On April 10, the register totals are sales $30,000 and sales taxes $1,500. 2. Waterman Company does not segregate sales and sales taxes. Its register total for April 15 is $25,680, which includes a 7% sales tax. Prepare the entry to record the sales transactions and related taxes for each client.

Question

contestada

Respuesta :

andromache andromache · Answer 1 · 2020-05-18T05:14:08+02:00

Answer and Explanation:

According to the scenario, journal entries of the given data are as follow:-

1.Journal Entry of Poole Company

April 10

Cash A/c Dr. $31,500

To Sales A/c $30,000

To Sales tax payable A/c $1,500

(Being the sales and sales tax payable is recorded)

2. Since Register total for April $25,680 includes 7% sales tax.

So Sales of Waterman Company

= Registered Total Amount ÷ (1 + Sales Tax Rate)

= $25,680 ÷ (1 + 7%)

= $25,680 ÷ 1.07

= $24,000

Now

Sales tax = $24,000 × 7% = $1,680

Journal Entry of Waterman Company

On 15 April

Cash A/c Dr. $25,680

To Sales A/c $24,000

To Sales tax payable A/c $1,680

(Being the sales and sales tax payable is recorded)