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 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:
|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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from Accounting 101: Financial AccountingChapter 8 / Lesson 2