Question

Record the following transactions of Fashion Park in a general journal. Fashion Park must charge 8 percent sales tax on all sales.DATETRANSACTIONS2019April2Sold merchandise for cash, $2,500 plus sales tax.3The customer purchasing merchandise for cash on April 2 returned $250 of the merchandise; provided a cash refund to the customer.4Sold merchandise on credit to Jordan Clark; issued Sales Slip 908 for $1,050 plus tax, terms n/30.6Accepted return of damaged merchandise from Jordan Clark; issued Credit Memorandum 302 for $150 plus tax. The original sale was made on Sales Slip 908 of April 4.

Answer 1

Step-by-step explanation:

The journal entries are shown below:

April 2

Cash A/c Dr $2,700

To Sales revenue A/c $2,500

To Sales tax payable $200 ($2,500 × 8%)

(Being merchandise is sold for cash with sales tax)

April 3

Sales returns and allowances A/c Dr $250

Sales tax payable A/c Dr $20 ($250 × 8%)

To Cash A/c $270

(Being returned goods with sales tax is recorded)

April 4

Accounts receivable A/c Dr $1,134

To Sales revenue $1,050

To Sales tax payable $84 ($1,050 × 8%)

(Being merchandise is sold on credit with sales tax)

April 6

Sales returns and allowances A/c Dr $150

Sales tax payable A/c Dr $12 ($150 × 8%)

To Accounts receivable $162

(Being returned goods with sales tax is recorded)

April 30

Cash A/c Dr $972 ($1,134 - $162)

To Accounts receivable $972

(Being the amount is received)