Question

Dextra Computing sells merchandise for \(6,000 cash on September 30 (the cost of merchandise is \)3,900). The sales tax law requires Dextra to collect 5% sales tax on every dollar of merchandise sold. (1) Record the entry for the $6,000 sale and its applicable sales tax. (2) Record the entry that shows the payment of 5% tax on this sale to the state government on October 15.

Short answer

(1) Cash is debited by $6,300, and Sales and Sales tax payable is credited by $6,000 and $300.

Costs of goods sold are debited by $3,900, and Merchandise inventory is credited by $3,900.

(2) Sales tax payable is debited by $300, and Cash is credited by $300.

Step-by-step solution

Meaning of Sales Tax

Sales tax is a tax imposed on the sale of goods and services, and the sellers collect it from the customers and submit it to the local or state authorities

Journal entry to record sale and sale tax

Date	Particulars	Debit ($)	Credit ($)
Sep 30	Cash	6,300
	Sales		6,000
	Sales tax payable$\mathbf{(}\mathbf{\$}\mathbf{6}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{5}\mathbf{\%}\mathbf{)}$		300
	(To record cash sales and sales tax 5%)
Sep 30	Cost of goods sold	3,900
	Merchandise inventory		3,900
	(To record cost of goods sold)

Journal entry to record the payment of tax to the state government

Date	Particulars	Debit ($)	Credit ($)
Oct 15	Sales tax payable	300
	Cash		300
	(To record remittance of sale taxes to government)