Sales Taxes Most of the food sold in retail stores in California is not subject to sales taxes (e.g., candy), but some items are (e.g., soft drinks). Apparently, the candy lobbyists were more effective than soft drinks lob- byists when dealing with the state legislature. Most cash registers are designed to record taxable sales and nontaxable sales and automatically add the appropriate sales tax. The sales for the past week in the local Safeway store were $140,000 cash, of which $40,000 was taxable at a rate of 7%. By using the AL+SE equation, show the impact on the entity, both now and when the sales taxes are paid at a later date. Also prepare corresponding journal entries.