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Hi John, this is regarding a previous question which was posted, but I wasn’t able to reply to it as the topic was closed. Apologies, I was probably not clear in my question. The link to the question was here: https://opentuition.com/topic/sales-tax-bbp-q-5-2/
My question wasn’t regarding the balance carried forward/brought down.
I would have thought that by using the information provided in the question, we would arrive at a balance. My approach would have been to open a sales tax control account, and show the balance brought down on the credit side ($4,540). Then I would put on the debit side the tax for purchases and on the credit side the tax on sales. Up to this point I am doing it the same way as the textbook answer.
However, I am wondering why the textbook answer then puts the closing debit balance in the question of $2,720 onto the credit side. I would have thought to put the closing debit balance on the debit side, and then closing off the account with cash as the new closing balance?
Thanks!
But the answer is the same as I posted before, and I gave an example as to how we carry down the balance.
To end up with a debit balance of 2,720, you need to carry down 2,720 from the credit side. (The answer doesn’t show the 2,720 being brought down on the debit side because they didn’t need to in order to answer the question)
Again, I do suggest that you watch my free lectures on how we close off the accounts.
Ah ok, I see what you mean. I interpreted that in the question, the “closing debit balance” meant that it had already been carried down from what was originally the credit balance from the previous period.
I’ve watched your lectures as well as reading the BBP textbook, but I suppose I always end up overthinking the question or interpreting in a different way.
Thanks!
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