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Recording known current liabilities C2 1. On July 15, Piper Co. sold $10,000 of merchandise (costing $5,000) for cash. The sales tax rate is 4%. On August 1, Piper sent the sales tax collected from the sale to the government. Record entries for the July 15 and August 1 transactions. 2. On November 3, the Milwaukee Bucks sold a six-game pack of advance tickets for $300 cash. On November 20, the Bucks played the first game of the six-game pack (this represented one-sixth of the advance ticket sales). Record the entries for the November 3 and November 20 transactions

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Answer:

The Journal entries are as follows:

1.

(a) On July 15,

(i) Cash A/c        Dr. $10,400

To sales                                   $10,000

To sales tax payable              $400

(To record sales)

(ii) Cost of goods sold A/c     Dr.  $5,000

To Inventory A/c                                         $5,000      

(To record cost of goods sold)

(b) On August 1,

Sales tax payable A/c   Dr. $400

To cash                                          $400

(To record payment of sales tax)

2.

(i) On November 3,

cash A/c             Dr. $300

To Unearned ticket revenue    $300

(To record revenue)

(ii) On November 20,

Unearned ticket revenue A/c   Dr. $50

To ticket revenue                                    $50

(To record adjusting entry)

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