Prepare entry to record the remittance of the sales taxes

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Reference no: EM13872182

Purpose: This exercise will provide an example of the proper accounting for an obligation to an agency of the state government-unremitted sales taxes.

During the month of September, Chelsea's Boutique had cash sales of $702,000 and credit sales of $411,000, both of which include the 6% sales tax that must be remitted to the state by October 15. Sales taxes on September sales were lumped with the sales price and recorded as a credit to the Sales Revenue account.

Instructions

(a) Prepare the adjusting entry that should be recorded to fairly present the financial statements at September 30.

(b) Prepare the entry to record the remittance of the sales taxes on October 5 if a 2% discount is allowed for payments received by the State Revenue Department by October 10.

Reference no: EM13872182

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