Phillippi Phones, Inc. provides wireless phone service. During April 2014, it bi
ID: 2491876 • Letter: P
Question
Phillippi Phones, Inc. provides wireless phone service. During April 2014, it billed customers a total of $111,000 before taxes. Phillippi also must pay the following taxes on these charges:
State of Illinois sales tax of 7%
Federal excise tax of 0.2%
State of Illinois use tax of 0.3%
Required:
Assuming Phillippi collects these taxes from the customers, what journal entry would Phillippi make when the customers pay their bills? If an amount box does not require an entry, leave it blank.
HideAssuming Phillippi collects these taxes from the customers, what journal entry would Phillippi make when the customers pay their bills? If an amount box does not require an entry, leave it blank.
Explanation / Answer
Customers Billing 111000 Sales tax @ 7% 7770 Federal excise tax @ 0.2% 222 State of ellinois use tax @ 0.3% 333 Total price 119325 Accounts receivable Dr 119325 Sales tax payable Cr 7770 Federal excise tax payable Cr 222 State of use tax payable Cr 333 Revenue Cr 111000 ( To record billing of saes) Cash Dr 119325 Accounts receivable Cr 119325 ( To record receipt of billing)