Question

You sold merchandise for $100 cash plus 6% sales tax. You correctly debited cash for $106 and credited sales for $100. Which account should have been credited for $6?

Answer 1

Journal Entry for given case will be recorded as follows:

Account Titles

Debit

Credit

Cash

$        106

Sales

$        100

Sales Tax Payable

$ 6

In the given Cash has been debited with $ 106 and Sales also credited with $ 100. So, remaining item of sales tax payable will be credited by $ 6.