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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?
A. $6,470.00
B. $11,910.00
C. $14,047.50
D. $13,162.10I found the wrong answer.
Have you watched my free lectures on sales tax, because everything needed for this question is explained in the lectures.
At the start of the month they were owing $4,540 to the state.
During the month they charged sales tax of 15/115 x 109,250 = 14,250 on the sales, and this is owing to the state.
Also during the month they suffered 15% x 64,000 = 9,600 on the purchases, and this reduces the amount owing to the state.So….if they had paid nothing during the month then they would have ended up owing 9,190 to the state.
In fact, at the end of the month the state was owing 2,720 back to Eva, which means that they must have paid more than 9,190. The must have paid 9,190 + 2,720 = 11,910.
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