A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $210,000, what is the amount of the sales taxes owed to the taxing authority?

• A :

  $199,500

• B :

  $200,000

• C :

  $10,000

• D :

  $10,500

• ____________________________________

• Best Boutique rewards its returning customers with a $5 gift card to use on their next purchase. They know that about 80% of the cards will be redeemed. On one very busy Saturday they gave out 675 gift cards. To recognize the liability that arises from the gift cards, Best Boutique would

• A :

  credit Unearned Revenue, $2,700.

• B :

  debit Sales Discounts for Gift Cards, $3,375.

• C :

  debit Unearned Revenue, $2,700.

• D :

  credit Gift Card Revenue, $3,375.

• ________________________________________________-

• Which of the following could indicate that a company has a liquidity problem?

• A :

  when a company's current assets exceed its current liabilities

• B :

  when a company has existing debts

• C :

  when a company has long-term liabilities

• D :

  when a company's current liabilities exceed its current assets