Question

Vail Book Mart sells books and other supplies to students in a state where the sales tax rate is 8 percent. Vail Book Mart engaged in the following transactions for Year 1. Sales tax of 8 percent is collected on all sales.

1. Book sales, not including sales tax, for Year 1 amounted to $277,000 cash.
2. Cash sales of miscellaneous items in Year 1 were $146,000, not including tax.
3. Cost of goods sold was $212,000 for the year.
4. Paid $129,000 in operating expenses for the year.
5. Paid the sales tax collected to the state agency.

Required
a. What is the total amount of sales tax Vail Book Mart collected and paid for the year?

b. Prepare the journal entries for the preceding transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.):

- Book sales, not including sales tax, for Year 1 amounted to $277,000 cash.

- Cash sales of miscellaneous items in Year 1 were $146,000, not including tax.

- Cost of goods sold was $212,000 for the year.

- Paid $129,000 in operating expenses for the year.

- Paid the sales tax collected to the state agency.

c. What is Vail Book Mart’s net income for the year?

Answer 1