Journalize the entries to record the following selected transactions: a. Sold $62,800 of merchandise on account, subject to a sales tax of 5%

Journalize the entries to record the following selected transactions:

a. Sold $62,800 of merchandise on account, subject to a sales tax of 5%. The cost of the merchandise sold was $37,500.

b. Paid $39,650 to the state sales tax department for taxes collected.

Answer:

a. Accounts Receivable65,940

Sales62,800

Sales Tax Payable ($62,800 × 5%)3,140

Cost of Merchandise Sold37,500

Merchandise Inventory37,500

b. Sales Tax Payable39,650

Cash39,650