Question

GAP has a sales revenue account balance of $150,000 including sale taxes of 4%. What would the journal entry be to record the previously sales and to then record sales taxes due?

Answer 1

The journal entry to record the sales revenue including sales taxes and then the sales taxes due would be as follows: Debit Sales Revenue Account for $150,000 Debit Sales Tax Payable Account for $6,000 (4% of $150,000) Credit Sales Revenue Account for $150,000 (to remove the previously recorded sales revenue) Credit Sales Tax Payable Account for $6,000 (to remove the previously recorded sales taxes due).

Step-by-step explanation:

The journal entry to record the sales revenue including sales taxes and then the sales taxes due would be as follows:

1. Debit Sales Revenue Account for $150,000
2. Debit Sales Tax Payable Account for $6,000 (4% of $150,000)
3. Credit Sales Revenue Account for $150,000 (to remove the previously recorded sales revenue)
4. Credit Sales Tax Payable Account for $6,000 (to remove the previously recorded sales taxes due)

This journal entry acknowledges the previous recording of sales revenue and sales taxes due, and then reverses those entries in order to accurately reflect the current situation.