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the following info relates to A co’s sales tax for the month of march 20X3:
sales(including tax) $109250
purchases(net of tax) $64000
sales tax is charged at a flat rate of 15%.A co’s sales tax a/c showed aan opening Cr bal of $4540 at the begining of the month and a closing Dr bal of $2720 at the end of the month??
what was the total sales tax paid to regulatory authorities during the month of march 20X3?
a.$6470
b.$11910
c.$14047.50
d.$13162.17my calculation was:
Cr side of tax a/c:
bal b/f =4540
output tax(109250X15)÷115=14250
dr side of tax a/c:
input tax(64000X15%)=9600
bal c/f=2720
Cr side is higher by $6470
so,sales tax paid is $6470(balancing fig)
but the solution says its $11910.
please help sirAt the start of the year they owed 4,540 to the state.
The tax on their sales is 15/115 x 109,250 = 14,250, and this is also owed to the state.
The tax on their purchases is 64,000 x 15% = 9,600, and this reduced the amount owed to the state.
Therefore, if they had paid nothing during the month then they would have been owing 4,540 + 14,250 – 9,600 = 9,190.
In fact, at the end of the month they are owed 2,720 back from the state (because it is a debit balance), so they must have paid cash of 2,720 more than 9,190. The total they must have paid is therefore 2,720 + 9,190 = $11,910
The closing balance is a debit balance which means that they are owed sales tax by the state (if they owed tax to the state then it would be a credit balance).
owk..I think I got it..
thank you very much sir for your hardwork that you doing selflessly for student like me!!
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