Question

The following selected transactions apply to Topeca Supply for November and December Year 1. November was...

The following selected transactions apply to Topeca Supply for November and December Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month.

  1. Cash sales for November Year 1 were $64,500 plus sales tax of 6 percent.
  2. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1.
  3. Cash sales for December Year 1 were $80,000 plus sales tax of 6 percent.

Required
a. Show the effect of the above transactions on a statements model like the one shown as follows. (In the Cash Flow column, use the initials "OA" for operating activities, "FA" for financing activities, and "IA" for investing activity. Enter any decreases to account balances with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.)
  

TOPECA SUPPLY
Horizontal Statements Model
Event Assets = Liabilities + Stockholder's Equity Income Statement Statement of Cash Flows
Cash = Sales Tax Payable + Common Stock + Retained Earnings Revenue – Expense = Net Income
1. = + + – =
2. = + + – =
3. = + + – =
Business   Accounting   
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Answer #1
TOPECA SUPPLY
Horizontal Statements Model
Event Assets = Liabilities + Stockholder's Equity Income Statement Statement of Cash Flows
Cash = Sales Tax Payable + Common Stock + Retained Earnings Revenue – Expense = Net Income
1. $68370 = $3870 + + 64500 $64500 – = $64500 $68370 OA
2. -3870 = -3870 + + – = -3870 OA
3. 84800 = 4800 + + 80000 80000 – = 80000 84800 OA

Calculation of Sales tax payable

November Year 1= $64500*6%= $3870

December Year 1= $80000*6%= $4800

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