In providing accounting services to small businesses, you encounter the followin
ID: 2346323 • Letter: I
Question
In providing accounting services to small businesses, you encounter the following situations pertaining to cash sales.Warkentinne Company rings up sales and sales taxes separately on its cash register. On April 10, the register totals are sales $30,000 and sales taxes $1,500.
Rivera Company does not segregate sales and sales taxes. Its register total for April 15 is $23,540, which includes a 7% sales tax.
Instructions
Prepare the entry to record the sales transactions and related taxes for each client. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Date Description Debit Credit
Warkentinne Company
Apr. 10
Rivera Company
Apr. 15
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Explanation / Answer
Warkentinne Company rings up sales and sales taxes separately on its cash register. On April 10, the register totals are sales $30,000 and sales taxes $1,500. Dr Cash 31,500 Cr Sales 30,000 Cr Sales Tax Payable 1,500 Rivera Company does not segregate sales and sales taxes. Its register total for April 15 is $23,540, which includes a 7% sales tax. 23,540 / 1.07 = 22,000 sales Dr Cash 23,540 Cr Sales 22,000 Cr Sales Tax Payable 1,540