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Sales (Included sales tax) $ 109250
Purchase (Net of sales tax ) $ 64000Sales tax is charged at a flat rate of 15% . Eva cos sales tax account showed an opening credit balance $ 4540 at the staring of the month and closing debit balance $ 2720 at the end of the month .
What is sales tax paid to authorities during the month of march 2003?
What is journal entries and close off the accounts?
Regards, VictorIn addition, please show the journal entries for Sales tax control a/c or T account ..regards victor
Have you watched my free lectures on sales tax? Because in the lectures I show the entries and write up the t-accounts.
However in the exam you cannot be asked to write up the accounts. You can do so as workings if it helps you (but nobody looks at your working) and it is faster not to write up accounts but just to work through it logically.
Also, why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers. They have answers and explanations.
At the start of the period they owed 4,540 to the state.
During the period they owe an extra 15/115 x 109,250 = 14,250 because of the sales.
This is reduced by 15% x 64,000 = 9,600 because of the purchases.Therefore at the end of the period, if that had paid nothing to the state they would have been owing 4,540 + 14,250 – 9,600 = 9,600.
In fact, at the end of the period they were owed back 2,720 by the state, which means that they must have paid during the period cash of 9,600 + 2,720 = 12,320.Dear Mr. John ,
=14250-9600=4650
Opening =4540
Closing= 2720Therefore :- =4650+4540+2720=11910 Correct answer .Please confirm.
Thanks
VictorDear Mr. John,
Could you able to confirm the answer in below link:
FIA -FFA Fiancial Accounting revision kit -2019
5.2 Answer showing -11910Regards, Victor
The BPP answer is correct.
If you checked the answer I wrote before you will see that everything is correct apart from a silly addition mistake.
Therefore at the end of the period, if that had paid nothing to the state they would have been owing 4,540 + 14,250 – 9,600 = 9,190 (I wrote 9,600 by mistake)
In fact, at the end of the period they were owed back 2,720 by the state, which means that they must have paid during the period cash of 9,190 + 2,720 = 11,910.
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