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Question 1: Which of the following represents the correct journal entry to record a taxable cash sale of $400 if the sales tax rate is 5%?
Multiple Choice Option 1: A debit to cash for $420, a credit to sales tax payable for $20, and a credit to sales revenue for $400.
Option 2: None of these answer choices are correct.
Option 3: A debit to cash for $420, a debit to sales tax expense for $20, and a credit to sales revenue for $400.
Option 4: A debit to cash for $400, a credit to sales tax payable for $20, and a credit to sales revenue for $380.
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