Which of the following represents the correct journal entry to record a taxable cash sale of $800 if the sales tax rate is 5%?
A)A debit to cash for $840, a debit to sales tax expense for $40, and a credit to sales revenue for $800.
B)A debit to cash for $840, a credit to sales tax payable for $40, and a credit to sales revenue for $800.
C)A debit to cash for $800, a credit to sales tax payable for $40, and a credit to sales revenue for $760.
D)None of the above.

Question

Quizplus · Accepted Answer

The transaction is recorded as a debit (increase) to cash of $840, the amount of the sale, plus the 5% sales tax collected, a credit (increase) to sales tax payable of $40, the amount owed to the state, and a credit (increase) to sales revenue of $800, the amount of the sale.

Which of the Following Represents the Correct Journal Entry to Record