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Adjusting Entry for Sales Tax

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E13-7 (Adjusting Entry for Sales Tax) During the month of June, Rowling Boutique had cash sales of $233,200 and credit sales of $153,700, both of which include the 6% sales tax that must be remitted to the state by July 15.

Instructions: Prepare the adjusting entry that should be recorded to fairly present the June 30 financial statements.

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The solution explains the adjusting entry for sales tax with calculations.

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The sales are recorded including the sales tax. The sales tax is collected on behalf of the government and so should be removed from sales ...

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