Compute the sales tax amount and prepare journal entries

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Compute the sales tax amount and prepare journal entries necessary to pay this.

Toys, Inc., sells merchandise in a state that has a 5 percent sales tax. Rather than record sales taxes collected in a separate account, the company records both the sales revenue and the sales taxes in the Sales account. At the end of the first quarter of operations, when it is time to remit the sales taxes to the state taxing agency, the company has USD 420,000 in the Sales account. Determine the correct amount of sales revenue and the amount of sales tax payable.

Reference no: EM13868266

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