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Goods sold for cash Rs. 10,000 plus 10% sales tax. Sales A/c will be credited by:
- a)Rs. 10,000
- b)Rs. 11,000
- c)Rs. 9,000
- d)None
Correct answer is option 'B'. Can you explain this answer?
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Goods sold for cash Rs. 10,000 plus 10% sales tax. Sales A/c will be c...
Calculation of Sales Tax
- The goods are sold for Rs. 10,000.
- The sales tax is 10% of the selling price, i.e. 10/100 * 10,000 = Rs. 1,000.
- Therefore, the total amount paid by the customer is Rs. 10,000 + Rs. 1,000 = Rs. 11,000.
Journal Entry
- The Sales A/c is credited because the company has made a sale.
- The amount to be credited is the selling price, i.e. Rs. 10,000.
- The sales tax collected is not revenue for the company, but a liability that has to be paid to the government.
- Therefore, the Sales Tax A/c is credited with the amount of Rs. 1,000.
The journal entry for the sale will be:
Debit - Cash A/c - Rs. 11,000
Credit - Sales A/c - Rs. 10,000
Credit - Sales Tax A/c - Rs. 1,000 (Liability)
Conclusion
Hence, the correct option is 'B', Rs. 10,000, as the Sales A/c will be credited with the selling price of the goods.
- The goods are sold for Rs. 10,000.
- The sales tax is 10% of the selling price, i.e. 10/100 * 10,000 = Rs. 1,000.
- Therefore, the total amount paid by the customer is Rs. 10,000 + Rs. 1,000 = Rs. 11,000.
Journal Entry
- The Sales A/c is credited because the company has made a sale.
- The amount to be credited is the selling price, i.e. Rs. 10,000.
- The sales tax collected is not revenue for the company, but a liability that has to be paid to the government.
- Therefore, the Sales Tax A/c is credited with the amount of Rs. 1,000.
The journal entry for the sale will be:
Debit - Cash A/c - Rs. 11,000
Credit - Sales A/c - Rs. 10,000
Credit - Sales Tax A/c - Rs. 1,000 (Liability)
Conclusion
Hence, the correct option is 'B', Rs. 10,000, as the Sales A/c will be credited with the selling price of the goods.
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Goods sold for cash Rs. 10,000 plus 10% sales tax. Sales A/c will be c...
No need to calculate sales tax separately and then give its corresponding effect. It has been already included in the sales.
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Goods sold for cash Rs. 10,000 plus 10% sales tax. Sales A/c will be credited by:a)Rs. 10,000b)Rs. 11,000c)Rs. 9,000d)NoneCorrect answer is option 'B'. Can you explain this answer?
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