Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $4,500 of cash sales that are subject to an 6% sales tax, what is the journal entry to record the cash sales

Debit Cash $4,770

Credit Sales $4,500

Credit Sales Taxes Payable 270

Explanation:

Preparation of the journal entry to record the cash sales for Cantrell Company

Debit Cash $4,770

Credit Sales $4,500

Credit Sales Taxes Payable 270

Explanation:

Since Cantrell Company is been required to receive and remit the sales taxes in which If Cantrell has $4,500 of cash sales that are subject to an 6% sales tax this means we have to Debit Cash $4,770, Credit Sales $4,500 and Credit Sales Taxes Payable 270.

The Sales Taxes Payable will be :

Sales × Sales Tax Rate

Sales Taxes Payable = $4,500 × 0.06= $270

( A Credit to Sales Taxes Payable)

The Cash Received will be:

Sales + Sales Taxes Payable

Cash Received = $4,500 + $270 = $4,770

( A Debit to Cash)