A restaurant made cash sales of 4000 subject to a 5 sales ta

A restaurant made cash sales of $4,000 subject to a 5% sales tax.

Record the sales and the related tax. Also record the payment of the tax to the state.

On October 1, 2014, Rhodes Company purchased equipment at a cost of $10,000.00,

signing a nine-month 8% note payable for that amount. Record the October 1 purchase

and the adjusting entry needed on December 31, 2014. Record the entry for the payment of

the note plus interest at maturity on July 1, 2015.

what is the Journal Entries

A restaurant made cash sales of $4,000 subject to a 5% sales tax.
Record the sales and the related tax. Also record the payment of the tax to the state.
On October 1, 2014, Rhodes Company purchased equipment at a cost of $10,000.00,
signing a nine-month 8% note payable for that amount. Record the October 1 purchase
and the adjusting entry needed on December 31, 2014. Record the entry for the payment of
the note plus interest at maturity on July 1, 2015.
what is the Journal Entries

Solution

Answers

Date

General Journal

Debit

Credit

1

Cash

$                                           4,200.00

Sales revenue

$                       4,000.00

Sales Tax payable

$                           200.00

(cash sales made)

2

Sales Tax payable

$                                               200.00

Cash

$                           200.00

(Sales tax paid to the states)

Notes Payable amount = $ 10,000
Interest rate = 8%
Term = 9 months
12 months Interest = 10000 x 8% = $ 800

3 months interest, from 1 Oct 2014 to 31 Dec 2014 = $ 800 x 3/12 = $ 200
Remaining 6 months interest, from 1 Jan 2015 to 30 June 2015 = $ 800 x 6/12 = $ 400

Journal Entries

Date

General Journal

Debit

Credit

01-Oct-14

Equipment

$                                         10,000.00

Notes payable

$                     10,000.00

(equipment purchased)

31-Dec-14

Interest expense

$                                               200.00

Interest payable

$                           200.00

(interest expenses accrued for 3 months)

01-Jul-15

Interest expense

$                                               400.00

Interest payable

$                                               200.00

Notes payable

$                                         10,000.00

Cash

$                     10,600.00

(notes paid on maturity)

Date	General Journal	Debit	Credit
1	Cash	$                                           4,200.00
	Sales revenue		$                       4,000.00
	Sales Tax payable		$                           200.00
	(cash sales made)
2	Sales Tax payable	$                                               200.00
	Cash		$                           200.00
	(Sales tax paid to the states)