In performing accounting services for small businesses you e

In performing accounting services for small businesses, you encounter the following situations pertaining to cash sales. 1. Crane Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $28,500 and sales taxes $1,425. 2. Sunland Company does not segregate sales and sales taxes. Its register total for April 15 is $17,120, which includes a 7% sales tax.

Solution

a Cash 29925      Sales Revenue 28500      Sales Tax payable 1425 b Cash 17120      Sales Revenue 16000      Sales Tax payable 1120 =17120/107*7