Use the following information for questions
Raney Co.is a retail store operating in a state with a 6% retail sales tax.The retailer may keep 2% of the sales tax collected.Raney Co.records the sales tax in the Sales account.The amount recorded in the Sales account during May was $148,400.
-The amount of sales taxes payable (to the nearest dollar) to the state for the month of May is
A)$8,551.
B)$8,232.
C)$8,726.
D)$9,249.

Question

Use the following information for questions 
Raney Co.is a retail store operating in a state with a 6% retail sales tax.The retailer may keep 2% of the sales tax collected.Raney Co.records the sales tax in the Sales account.The amount recorded in the Sales account during May was $148,400.
-The amount of sales taxes payable (to the nearest dollar) to the state for the month of May is
A)$8,551.
B)$8,232.
C)$8,726.
D)$9,249.

Quizplus · Accepted Answer

The first step is to calculate the total amount of sales during May including the sales tax. This can be calculated by dividing the May Sales amount by (1 + sales tax rate) which is 1.06 in this case.
May Sales including tax = $148,400 / 1.06 = $140,000
The amount of sales tax collected is equal to the May Sales including tax multiplied by the sales tax rate which is 6% in this case.
Sales tax collected = $140,000 x 6% = $8,400
Raney Co. is allowed to keep 2% of the sales tax collected which is $168 (2% of $8,400).
Therefore, the amount of sales taxes payable to the state is calculated as follows:
Sales taxes payable = Sales tax collected - Amount allowed to be kept by retailer
Sales taxes payable = $8,400 - $168 = $8,232 (rounded to nearest dollar)
So, the best choice is B.

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