Eaton Technology operates retail stores throughout the tri- state area. The company’s sales are subject to a 7% sales tax payable to the state and county government. At the end of the current year, Eaton reported accounts receivable of $ 5,617,500 for credit sales, which includes the sales value of the merchandise sold plus the sales taxes.
Required
a. Prepare the journal entry required to record the sales for the current year. The company uses a periodic inventory system.
b. Prepare the journal entry to record the sales taxes Eaton remitted to the state and county taxing jurisdictions.