Cantrell Company is required by law to collect and remit sales taxes to the state.If Cantrell has $8,000 of cash sales that are subject to an 8% sales tax,what is the journal entry to record the cash sales?
A)Debit Cash $8,000;credit Sales $7,360;credit Sales Taxes Payable $640.
B)Debit Sales Taxes Payable $640;debit Cash $7,360;credit Sales $8,000.
C)Debit Cash $8,000;credit Sales $8,000;and record the taxes when paid.
D)Debit Cash $8,640;credit Sales $8,000;credit Sales Taxes Payable $640.
E)Debit Accounts Receivable $8,640;credit Sales $8,000;credit Sales Taxes Payable $640.

Question

Quizplus · Accepted Answer

The total cash received is $8,640, which includes $8,000 for sales and $640 for sales tax (8% of $8,000). The entry records the cash received and the liability for sales tax payable.

Cantrell Company Is Required by Law to Collect and Remit