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 lobbyists 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

Quick MartQuick Mart

store were

$181,000

cash, of which

$45,000

was taxable at a rate of

5%.

Requirement

1.	By using the A = L + 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.

Requirement 1. By using the A = L + SE equation, show the impact on the entity, both now and when the sales taxes are paid at a later date. (Enter decreases with a minus sign or parentheses and leave any unused cells blank.)

	Assets	=	Liabilities + Stockholders' Equity
			Sales tax		Retained
	Cash	=	payable	+	earnings
Record sales		=		+
Payment of taxes		=		+

Prepare corresponding journal entries. Begin with the entry to record sales. (Record debits first, then credits. Explanations are not required.)

		Accounts	Debit	Credit

Prepare the entry to record the payment of the taxes.

Date		Accounts	Debit	Credit

Choose from any list or enter any number in the input fields and then continue to the next question.