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On July 15, Piper Co. sold $24,000 of merchandise (costing $12,000) for cash. The sales tax rate is 4%. On August 1, Piper sent the sales tax collected from the sale to the government. Record entries for the July 15 and August 1 transactions. On November 3, the Milwaukee Bucks sold a six game pack of advance tickets for $720 cash. On November 20, the Bucks played the first game of the six game pack (this represented one-sixth of the advance ticket sales). Record the entries for the November 3 and November 20 transactions.

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Answer:

July 15

Dr Cash $24,960

Cr Sales $24,000

Cr Sales Taxes Payable $960

Dr Cost of Goods Sold $12,000

Cr Merchandise Inventory $12,000

On August 1

Dr Sales Taxes Payable $960

Cr Cash $960

On November 3

Dr Cash $720

Cr Unearned Ticket Revenue $720

On November 20

Dr Unearned Ticket Revenue $120

Cr Ticket Revenue $120

Explanation:

Preparation of the journal entries

July 15

Dr Cash $24,960

($24,000+$960)

Cr Sales $24,000

Cr Sales Taxes Payable $960

($24,000*4%)

Dr Cost of Goods Sold $12,000

Cr Merchandise Inventory $12,000

On August 1

Dr Sales Taxes Payable $960

Cr Cash $960

($24,000*4%)

On November 3

Dr Cash $720

Cr Unearned Ticket Revenue $720

On November 20

Dr Unearned Ticket Revenue $120

Cr Ticket Revenue $120

(1/6*$720)

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