Accounting

Question

Sold merchandise for $2,500 cash and collected sales tax of $300. The journal entry to record this information would be what?

Answer 1

The answer above might be  incorrect. If only $2,500 was collected, then cash should be debited for $2,500--not $2,800. As you can see the wording of the problem is key to correctly solving the problem.  Had I worded the problem as follows-- Sold merchandise for $2,500 (including sales tax of $300) for cash-- then it would have been clear how much cash was actually collected--$2,500.

Answer 2

Debit cash    $2800

      Credit sales                 $2500

      Credit sales tax payable $300