Question

Exceptional Electronics began operations September 1, 2019. The firm sells its merchandise for cash and on open account. Sales are subject to a 7 percent sales tax. During September, Exceptional Electronics engaged in the following transactions:

DATE		TRANSACTIONS
2019
Sept.	1	Sold a high-definition television set on credit to Candy Cho; issued Sales Slip 101 for $2,100 plus sales tax of $147.
	3	Sold stereo equipment on credit to Jim Peterson; issued Sales Slip 102 for $900 plus sales tax of $63.
	7	Sold a microwave oven on credit to Bridgette Huffman; issued Sales Slip 103 for $300 plus sales tax of $21.
	12	Accepted return of defective stereo equipment from Jim Peterson; issued Credit Memorandum 101 for $200 plus sales tax of $14. The stereo equipment was sold on September 3.
	15	Recorded cash sales for the period from September 1 to September 15 of $10,500 plus sales tax of $735.
	16	Sold a gas dryer on credit to Kathy Sundstrand; issued Sales Slip 104 for $600 plus sales tax of $42.
	17	Sold a home entertainment system on credit to Mark Navalta; issued Sales Slip 105 for $2,100 plus sales tax of $147.
	18	Received $670 from Candy Cho on account.
	20	Received payment in full from Jim Peterson for the sale of September 3, less the return of September 12.
	25	Gave Mark Navalta an allowance because of scratches on his home entertainment system sold on September 17, Sales Slip 105; issued Credit Memorandum 102 for $200 plus sales tax of $14.
	27	Received payment in full from Bridgette Huffman for the sale of September 7.
	29	Sold a dishwasher on credit to Mark Navalta; issued Sales Slip 106 for $400 plus sales tax of $28.
	30	Recorded cash sales for the period from September 16 to September 30 of $10,800 plus sales tax of $756.

Required:
Record the transactions in a general journal.

Analyze:
What portion of the sales during September were for entertainment items? Assume the cash sales transactions are for non-entertainment items. (Hint: Do not forget to reduce sales by any sales returns or allowances.)

Answer 1

Formula sheet

A	B	C	D	E	F	G
2
3		Sale Tax	0.07
4
5		Journal Entries are as follows:
6
7		Date	Account	Debit	Credit
8
9		43344	Accounts Receivable	=F10+F11
10			Sales		2100
11			Sales tax liability		147
12
13		43346	Accounts Receivable	=F14+F15
14			Sales		900
15			Sales tax liability		63
16
17		43350	Accounts Receivable	=F18+F19
18			Sales		300
19			Sales tax liability		21
20
21		43355	Sales Return and allowances	200
22			Sale tax Liability	14
23			Accounts Receivable		=E21+E22
24
25		43358	Cash	=F26+F27
26			Sales		10500
27			Sales tax liability		735
28
29		43359	Accounts Receivable	=F30+F31
30			Sales		600
31			Sales tax liability		42
32
33		43360	Accounts Receivable	=F34+F35
34			Sales		2100
35			Sales tax liability		147
36
37		43361	Cash	670
38			Accounts Receivables		=E37
39
40		43363	Cash	=F41
41			Accounts Receivables		=E13-F23
42
43		43368	Sales Return and allowances	200
44			Sale tax Liability	14
45			Accounts Receivable		=E43+E44
46
47		43370	Cash	=F48
48			Accounts Receivables		=E17
49
50		43372	Accounts Receivable	=F51+F52
51			Sales		400
52			Sales tax liability		28
53
54		43373	Cash	=F55+F56
55			Sales		10800
56			Sales tax liability		756
57