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During December, Rainey Equipment made a $668,000 credit sale. The state sales tax rate is 6% and...

Question:

During December, Rainey Equipment made a $668,000 credit sale. The state sales tax rate is 6% and the local sales tax rate is 1.5%. Prepare the appropriate journal entry.

Taxes:

Taxes are liabilities of individuals and businesses to the state, which shall be used in public needs such as infrastructure, government operations and for the public good. Taxes can be generate from income, sales, donation, estate, value added tax and the like.

Answer and Explanation:

Accounts Receivables 668,000
Sales 617,900
Sales tax Payable-State 40,080
Sales Tax Payable-Local 10,010
To record the sale of equipment with applicable sales taxes.


The sales taxes payable will be debited when remitted.


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How to Account for Sales, Property & Income Taxes

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