Using T accounts for Cash, Accounts Receivable, Sales Tax Payable, Sales, Sales Returns and Allowances, and Sales Discounts, enter the following sales transactions. Use a new set of accounts for each part, 1–5.
1. No sales tax.
(a) Merchandise is sold for $300 cash.
(b) Merchandise is sold on account for $285.
(c) Payment is received for merchandise sold on account.
2. 5% sales tax.
(a) Merchandise is sold for $300 cash plus sales tax.
(b) Merchandise is sold on account for $285 plus sales tax.
(c) Payment is received for merchandise sold on account.
3. Cash and credit sales, with returned merchandise.
(a) Merchandise is sold for $325 cash.
(b) $25 of merchandise sold for $325 is returned for refund.
(c) Merchandise is sold on account for $350.
(d) $35 of merchandise sold for $350 is returned for a credit.
(e) Payment is received for balance owed on merchandise sold on account.
4. 5% sales tax, with returned merchandise.
(a) Merchandise is sold on account for $400 plus sales tax.
(b) Merchandise sold on account for $40 plus sales tax is returned for a credit.
(c) Balance on account is paid in cash.
(d) Merchandise is sold for $280 cash plus sales tax.
(e) $20 of merchandise sold for $280 cash plus sales tax is returned for a refund.
5. Sales on account, with 2/10, n/30 cash discount terms.
(a) Merchandise is sold on account for $350.
(b) The balance is paid within the discount period.
(c) Merchandise is sold on account for $290.
(d) The balance is paid after the discount period.