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    The University book store sells books and other supplies to

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    The University book store sells books and other supplies to students in a state where the sales tax rate is 7 percent. The University Book Store engaged in the following transactions for 2012. Sales tax of 7% is collected on all sales.

    1. Book sales, not including sales tax amounted to $275,000.00 cash.
    2. Cash sales of miscellaneous items in 2012 were $150,000.00, not including tax.
    3. Cost of goods sold amounted to $210,000.00 for the year
    4. Paid $130,000.00 in operating expense for the year
    5. Paid the sales tax collected to the State agency.

    Required:
    a. What is the total amount of sales tax the University book store collected and paid for the year?
    b. What was the University Book Store's net income for the year?

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    https://brainmass.com/business/accounting/university-book-store-sells-books-supplies-440045

    Solution Preview

    A -
    Book sales = 275,000
    Misc. sales = 150,000
    Total sales = 425,000 * 7% = 29,750
    A = $29,750.00

    B -
    Gross sales: 425,000
    COGS : ...

    Solution Summary

    The University book store sells books and other supplies to students in a state where the sales tax rate is 7 percent. The University Book Store engaged in the following transactions for 2012. Sales tax of 7% is collected on all sales.

    1. Book sales, not including sales tax amounted to $275,000.00 cash.
    2. Cash sales of miscellaneous items in 2012 were $150,000.00, not including tax.
    3. Cost of goods sold amounted to $210,000.00 for the year
    4. Paid $130,000.00 in operating expense for the year
    5. Paid the sales tax collected to the State agency.

    Required:
    a. What is the total amount of sales tax the University book store collected and paid for the year?
    b. What was the University Book Store's net income for the year?

    $2.19

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