Question: sales tax transactions illustrate the effects on the accounts and...

Sales Tax Transactions

Illustrate the effects on the accounts and financial statements of recording the following selected transactions. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases, cash outflows, and the cost of merchandise sold as negative amounts.

a. Sold $11,250 of merchandise on account, subject to a sales tax of 6%. The cost of the merchandise sold was $6,750.

   
Statement of Cash Flows   Balance Sheet   Income Statement
Assets   =   Liabilities   +   Stockholders' Equity
Accounts Receivable
+  
Inventory
=  
Sales Tax Payable
+     
Retained Earnings
   
   
   
      

Statement of Cash Flows      Income Statement
No effect

0
   
Sales

-6,750
   
Cost of goods sold

   
Net income

b. Paid $63,120 to the state sales tax department for taxes collected.

   
Statement of Cash Flows   Balance Sheet   Income Statement
Assets   =   Liabilities   +   Stockholders' Equity
Cash
+  
No Effect
=  
Sales Tax Payable
+     
No Effect
   
   
0
   
      
0

Statement of Cash Flows      Income Statement
Operating

   
No effect

0
   
No effect

0
   
No effect

0