Merchandise is sold for cash. The selling price of the merchandise is $6,000 and

Question

Merchandise is sold for cash. The selling price of the merchandise is $6,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include a credit to

sales tax payable for $420

sales for $6,240

sales for $5,580

cash for $6,000

When merchandise purchased on account is returned under the perpetual inventory system, the buyer would debit

Purchases Returns and Allowances

Accounts Payable

Accounts Receivable

Merchandise Inventory

Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly savings rate of approximately

20%

24%

36%

0%

Explanation / Answer

Question 1

Correct Answer: sales tax payable for $420

Following journal entry will have to be passed –

Cash A/c. …..Dr. 6420

To Sales A/c.                      6000

To Sales Tax Payable A/c.             420

Question 2

Correct Answer: Accounts Payable

Question 3

Correct Answer: 20%

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