Sales Tax Calculation
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Padres Co. sells goods subject to a state tax of 5%. State law requires that the amount of sales tax collected during the month be remitted by the end of the following month. At the time of a sale, Padres Co credits the sales account for both the amount of sales revenue and sales tax. Sales tax, when paid, is then debited to the sales account. Accrual for sales tax payable is made only at December 31. Sales revenue for September, 2005 was $1,120,000; the total amount credited to the sales account during October, 2005 was $1,428,000; sales tax collected during November, 2005 was $54,000. Total sales tax paid to the state during the months of September, October, and November of 2005 was $186,000. Total SAles REvenue for January through July of 2005 was $7,700,000.
Compute the :
1) amount of sales tax collected in October, 2005
2) amount of sales revenue reported in August, 2005
3) total amount credited to the sales account during November, 2005
4) balance of the sales account at November 30, 2005.
Clue must match: Total credits to the sales account during September and November exceed the total debits to the sales account during September and November by $2,180,000
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Solution Summary
The solution explains how to calculate the total amount of sales and sales tax
Solution Preview
1. The total amount credited in October was 1,428,000. This is inclusive of the sales tax at 5%. A sale of $100 is credited to sales account at $105. The actual sales in October would be 1,428,000/1.05=1,360,000. The sales tax is 1,428,000-1,360,000=68,000
2. The total tax paid during Sept,Oct and Nov=186,000. ...
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