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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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?
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 : ...
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