Accounting Sales Tax Payable Transactions

Question

You sell merchandise on account to Blair Company for $15,900. The cost of merchandise sold is $7,500. There is a 7% sales tax on the transaction.

Answer 1

I presume you are asking for the journal entry associated with booking this transaction. The journal entry is as follows:

Dr.  A/R Blair co.           17,013

Cr.  A/P sales Tax                   1.113

Cr.  Sales                             15,900

 

Dr. Cost of Goods sold           7,500

Cr. Inventory                                 7,500