Cash 10,000 Ledger Capital 10,000 10,000 Sales Tax Payable 0 0 Federal Withholding Social Security W/H Sales Cost of Goods Sold 10,000 0 Wage Expense 0 Trial Balance 0 Debit Credit Cash 10,000 Sales tax Payable 0 Federal W/H 0 Soc Sec W/H 0 State W/H 0 401K W/H 0 Capital 10,000 Sales 0 0 Wage Expense 0 Total 10,000 10,000 State Withholding 401K Withholding 0 Joumal Entries 1 Wage Expense Federal Tax Withholding Social Security Mithholding State Tax Withholding 401K Withholding Cash Dr 500 75 50 315 2 The company sends out checks to deposit the taxes/retirement withholdings To the IRS, for federal withholding & Social Security ($75+ $35 - $110 To the Massachusetts Dept of Revenue for state taxes ($25) To the 401K plan for retirement savings ($50) Wage Expense recorded was $500 Cash disbursements by company 315+110 +25 +50 = $500 Dr Federal Tax Withholding 75 Social Security Withholding 35 Cash 110 State Tax Withholding 25 Cash 25 401K Withholding 50 Cash 50 3 A customer walks into the store and buys $100 worth of goods Assume the sales tax is 6% The customer pays $106 - the purchase price plus the sales tax (you may disegard the COGS side of the entry) 3 Cash Sales Sales Tax Payable 3 A customer walks into the store and buys $100 worth of goods Assume the sales tax is 6% The customer pays $106 - the purchase price plus the sales tax (you may disegard the COGS side of the entry) 3 Cash Sales Sales Tax Payable Dr Cr 106 100 6 4 Once a month, the company sends all the sales tax collected to the state The company received $106; it pays out $6 to the state; net cash = $10 4 Sales Tax Payable Cash Dr Cr 6 61