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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 (correct answer)
C $14,047.50
D $13,162.17I’ve tried solving the answer that was given in the revision kit but i couldnt understand it. Can you please help me out with this question?
Have you watched my free lectures on sales tax?
At the start of the month they were owing 4,540 to the state.
This amount increased by the tax they have charged on the sales, which is 15/115 x 109,250 = 14,250.The amount is reduced by the tax they have been charged on the purchases, which is 15% x 64,000 = 9,600.
So if they had not paid anything to the state, they would be owing 4,540 + 14,250 – 9,600 = 9,190.
In fact, at the end of the month they were owed from the state 2,720, which means that they must have paid 9,190 + 2,720 = 11,910.
Yes sir. I’ve watched all the lectures. I think i just need some practice. Thank you very much for the answer though. Deeply sorry for the late reply.
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