Answer:
Debit Accounts receivable $2170
Credit sales revenue $2000
Credit State tax $120
Credit Local tax $50
Explanation:
When sales are made on credit, the entries required are debit Accounts receivable and credit Sales revenue.
Considering the taxes, the entries would then be grossed by the tax percentage and the grossed amount is debited to accounts receivable while the taxes are credited to the tax payable account.
State tax
= 6% * $2,000
= $120
Local tax
= 2.5% * $2,000
= $50
Total receivable
= $2000 + $120 + $50
= $2170
Answer:
Dr. Account Receivable $2,170
Cr. Sales tax Payable $170
Cr. Sales $2,000
Explanation:
Goods and Services are subject to taxes and these taxed are collected by the business from its customers on the behalf of the government. The tax is included in the invoices and recorded separately from the sales.
Credit sales = $2,000
Sales Tax = $2,000 x 6% = $120
Local sales tax = $2,000 x 2.5% = $50
Total Sales tax Payable = $120 + 50 = $170
Receivable amount = $2,000 + $120 + $50 = $2,170
