- This topic has 10 replies, 7 voices, and was last updated 6 years ago by
.
- Posts
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) 64,000
Sales 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?My answer is 6470.
Draw a T account would help to sort this outsales tax for this month = 14250
x +15%x = 109250 so x= 109250 / 1.15 = 95000
15%x = 95000*15% = 14250
Purchase tax for this month = 64000 *15% = 9600
sales tax account
Dr side = 9600 + 2720 = 12320
Cr side = 4540 + 14250 = 18790
the difference = 18790 – 12320 =6470 which is the amount that we need to pay to authorities as output sales tax > input sales tax.
Hope the answer is correct.hi
but i think that the closing debit balance is given and so,
Dr- 9600
Cr-4540+2720+14250=21510
=11910 on Dr..ie closing credit balanceyes I had the same question, I was going to post it…
vrushali is write the answer is 11910. this question is in bpp mock exam 1.
but I can’t understand why when they said that there is a closing DEBIT balance of $2,720 at the end of the month, they put it on the T account on the credit side?@vrushali said:
hi
but i think that the closing debit balance is given and so,
Dr- 9600
Cr-4540+2720+14250=21510
=11910 on Dr..ie closing credit balanceI’m so sorry for my wrong post.
As vrushali said the answer is 11,910
Actually, I didn’t draw the T account for this question and posted my answer just by reading the prior answer. The question said that the closing balance is a debit figure of 2,720 so it means that 2,720 should be account as a credit c/f figure because the b/f is a debit figure.Beg your pardon again
can you please explain this
Quote:The question said that the closing balance is a debit figure of 2,720 so it means that 2,720 should be account as a credit c/f figure because the b/f is a debit figure.in more details if it’s possible.
because I thought that when it’s said that closing balance is debit in T account it must be on debit side …Please forget temporarily this question and study other questions which say about ” closing balance “. Can you remember any debit closing balance that should be accounted in debit side of account?
I think when a question says ” debit closing balance ” its carried forward should be credit. In fact a closing balance is just a balance so it’s not an entry like carried forward in the accounts’ turnover.
I hope you got what I want to say.I had only two of such questions … one is this 😀
but I understood what you want to say. thanks a lotThank you but my question is on sales why did we say tax 15%/115% instead of just taxing it with 15% . and lastly why on the debit balance are we still crediting it . please help am trying to understand
- The topic ‘Tax problem’ is closed to new replies.