question 6 of 6\na customer returns $47.70 worth\nof goods, of which $2.70 is sales\ntax, for in store…

question 6 of 6\na customer returns $47.70 worth\nof goods, of which $2.70 is sales\ntax, for in store credit. what\njournal entry is used to record this\ntransaction?

question 6 of 6\na customer returns $47.70 worth\nof goods, of which $2.70 is sales\ntax, for in store credit. what\njournal entry is used to record this\ntransaction?

Answer

Explanation:

Step1: Determine the amount of sales (excluding tax)

The total return is $47.70 and the sales tax is $2.70. So the sales amount (ex - tax) is $47.70−$2.70 = $45.

Step2: Analyze the accounts affected

  • Sales Returns and Allowances is debited (as it is a contra - revenue account and returns decrease revenue).
  • Sales Tax Payable is debited (since the tax liability associated with the sale is reversed).
  • Store Credit (a liability account if it's a store - issued credit) is credited (as the store now owes the customer the credit).

The journal entry is: Debit Sales Returns and Allowances $45 Debit Sales Tax Payable $2.70 Credit Store Credit $47.70

Answer:

Debit Sales Returns and Allowances $45, Debit Sales Tax Payable $2.70, Credit Store Credit $47.70