Cypress Corp. had sales on account of $19,500 which were subject to state sales tax of 12%. The entry to record the sales would be to:
A)debit Accounts Receivable $19,500; debit Sales Tax Payable $2,340; credit Sales Revenue $21,840.
B)debit Accounts Receivable $21,840; credit Sales Revenue $19,500; credit Sales Tax Payable $2,340.
C)debit Accounts Receivable $19,500; credit Sales Revenue $19,500.
D)debit Accounts Receivable $21,840; credit Sales Revenue $21,840.

Question

Quizplus · Accepted Answer

The correct entry includes debiting Accounts Receivable for the total amount including sales tax ($21,840) and crediting Sales Revenue for the sales amount before tax ($19,500) and Sales Tax Payable for the sales tax amount ($2,340).