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Hello Mr. Moffat, I am a bit confused from the qstn below as to why they ask for sales tax paid to regulatory authorities yet it is a debit balance from the t-account. Cash paid was B $11910 which is still on the debit side. Shouldn’t it rather be the tax authorities to pay? Thank you
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) 64,000 Sales 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? A $6,470.00 B $11,910.00 C $14,047.50 D $13,162.17
The double entry for paying sales tax to the state is Credit Cash and Debit the sales tax account. So in this question, the tax paid to the state is the missing figure on the t-account.
Have you watched my free lectures on sales tax? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Yes, I have watched your lectures repeatedly to understand but of course sometimes questions help you to understand the lecture even more.
Your explanation totally makes it all clear for me. I had not put into account debiting cash on the tax account after paying it.
Thank you so much. You are such a great tutor. God Bless You
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