If Cantrell has $6,500 of cash sales that are subject to an 9% sales tax, what is the journal entry to record the cash sales?

Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $6,500 of cash sales that are subject to an 9% sales tax, what is the journal entry to record the cash sales?

Debit Cash $6,500; credit Sales $5,915; credit Sales Taxes Payable $585.
Debit Cash $7,085; credit Sales $6,500; credit Sales Taxes Payable $585.
Debit Cash $6,500; credit Sales $6,500; and record the taxes when paid.
Debit Sales Taxes Payable $585; debit Cash $5,915; credit Sales $6,500.
Debit Accounts Receivable $7,085; credit Sales $6,500; credit Sales Taxes Payable $585.

Solutions

Expert Solution

option 2nd is correct. i.e Debit Cash $7,085; credit Sales $6,500; credit Sales Taxes Payable $585.

cantrell has 6500 of cash sales that are subject to an 9% sales taxes.

So tax will be

=6500 *9%

=585

Company has to collect and remit sales taxes of $ 585 to the state.
Accounts	Debit($)	Credit($)
Cash	7085
Sales		6500
Sales tax payable (7000*0.06)		585

ekkarill92 answered 2 years ago

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