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# The University book store sells books and other supplies to

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 : ...

#### 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