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On february 13, a jewelry store sells an engagement ring with a sales price of $10,000 to a nervous young man, who pays in cash. the sale is subject to a 9.75 percent sales tax. Prepare the revenue portion of the February 13 journal entry for the jewelry store by selecting the account names and dollar amounts from the drop-down menus.

Sagot :

Cash 10,000 debit

  sales tax payable   975

  sales revenue   9,025, This would be journal entry for the jewelry store.

Explain the above journal entry.

The double-entry bookkeeping system of accounting is the primary foundation for the journal entry format, which ensures that the debit side and credit side are always equal. Journal entry format is the standard format used in bookkeeping to keep a record of all the business transactions of the company. Five columns make up the typical format: Transaction Date, Business Transaction Details, Folio Number, Debit Entry, and Credit Entry.

the sale was made on cash, so we use cash account.

then to calculate the sale tax payable:

sales price x tax sale rate = sale tax payable

10,000 x 0.0975 = 975

finally the revenue will be the difference between the proceeds of the sale and the taxes.

revenue = price - tax = 10,000 - 975 = 9,025

To study more about journal entry.

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