Metropolitan Masonry had sales on account of $7,200 which were subject to state sales tax of 7%.The entry to record the sales would be to:
A)debit Accounts Receivable,$7,704;credit Sales revenue,$7,200;credit Sales tax payable,$504.
B)debit Accounts Receivable,$7,704;credit Sale revenue,$7,704.
C)debit Accounts Receivable,$7,200;credit Sales revenue,$7,200.
D)debit Accounts Receivable,$7,200;debit Sales tax payable,$504;credit Sales revenue,$7,704.

Question

Quizplus · Accepted Answer

The sales on account are debited to Accounts Receivable for $7,200, and since there is sales tax of 7%, it is necessary to credit Sales Revenue for the net sales revenue of $7,200 and Sales Tax Payable for $504 (7% of $7,200). Therefore, the correct entry would be to debit Accounts Receivable for $7,704, credit Sales Revenue for $7,200, and credit Sales Tax Payable for $504. The other options do not account for the sales tax payable correctly.

Metropolitan Masonry Had Sales on Account of $7,200 Which Were