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Hi John, quick question regarding this question about sales tax:
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) is 64 000
Sales tax is charged at 15%. Eva’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.My question is, why is it that in the answers both the opening and closing balance are showing in the credit side of the sales tax account? When it states above that opening is a credit balance and closing is a debit balance? Is the answer an error? Thanks!
Suppose the you have a t-account with 100 on the debit side and 20 on the credit side.
The balancing figure is 80 on the credit side which is carried forward and brought forward on the debit side.I really do suggest that you watch my free lectures – they are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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