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The following information relates to Eva Co’s sales tax for the month of March 20X3:
Sales (including sales tax) : $ 109,250
Purchases (net of sales tax) : $ 64,000Sales tax is charged at a flat rate of 15%. Eva Co’s sales tax account showed an opening credit balance of $ 4,540 at the beginning of the month and a closing debit balance of $ 2,720 at the end of the month.
What was the total sales tax paid to regulatory authorities during the month of March 20X3?
Have you watched the free lecture on sales tax?
The tax payable to the state on the sales is 15/115 x $109,250 = 14,250
The tax due from the state on the purchases is 15% x $64,000 = 9,600You know how much was owing at the beginning of the month ($4,540).
So if they had not paid anything during the month they would be owing 4540 + 14250 – 9600.
However, at the end of the month the state owed 2720 back to the company, so you should now be able to calculate how much they had actually paid during the month.
(Surely the book in which you found this question also has the answers? It would be better if you asked about which part was causing you a problem rather than simply set it as a test for me to do 🙂 )
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