• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

Sales tax and accounting equation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Sales tax and accounting equation

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • December 18, 2022 at 2:12 pm #674851
    acipa
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Greetings sir, the question from Kaplan study text is a new entity was formed with an initial issue of 1000 shares for $1 cash per share.Inventory costing 800 net of sales tax at17.5% was purchased on credit.Half of this inventory was sold for 1000 plus sales tax,the customer paying promptly in cash. What would the accounting equation after these transactions show.

    December 18, 2022 at 7:08 pm #674866
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54668
    • ☆☆☆☆☆

    Inventory is 400.

    The profit is 1,000 – 400 = 600.

    The cash received from the sale of inventory is 1175

    The sales tax payable to the state is 175 – (17.5% x 800) = 35

    The payable for the inventory is 800 + (17.5% x 800) = 940.

    Therefore total cash = 1,000 + 1,175 = 2,175
    Total inventory = 400
    Total current liabilities = 940 + 35 = 975

    Therefore net assets = 2,175 + 400 – 975 = 1,600
    Capital = 1,000
    Profit = 600

    Have you watched my free lectures on sales tax?

    December 18, 2022 at 8:57 pm #674868
    acipa
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Yes sir,thanks for the reply.

    December 19, 2022 at 7:36 am #674885
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54668
    • ☆☆☆☆☆

    You are welcome.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Sales tax and accounting equation’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • kadamova.f@gmail.com on Associates (IAS 28) – PUPs – ACCA Financial Reporting (FR)
  • kadamova.f@gmail.com on Associates (IAS 28) – PUPs – ACCA Financial Reporting (FR)
  • bpop on Risk and uncertainty (part 2) – ACCA (AFM) lectures
  • kamo7293 on Financial performance – Example 2 – ACCA Financial Reporting (FR)
  • nevertoolate on CIMA BA2 – Regression analysis

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in