question 4 of 6\na customer returns merchandise\nand is issued a cash refund of\n$56.18. assuming the…

question 4 of 6\na customer returns merchandise\nand is issued a cash refund of\n$56.18. assuming the customer\nlives in a state where sales tax is\n6%, what is the journal entry used\nto record this return?

question 4 of 6\na customer returns merchandise\nand is issued a cash refund of\n$56.18. assuming the customer\nlives in a state where sales tax is\n6%, what is the journal entry used\nto record this return?

Answer

Explanation:

Step1: Calculate the sales amount before tax

Let the sales amount before tax be (x). The total refund amount ((x + 0.06x)) is ($56.18). So, (x(1 + 0.06)=56.18), which gives (x=\frac{56.18}{1.06}). [x = 53]

Step2: Calculate the sales tax amount

Sales tax amount (=56.18 - 53=$3.18)

Step3: Determine the journal - entry accounts

When a customer returns merchandise and gets a cash refund:

  • Sales Returns and Allowances (a contra - revenue account) is debited for the sales amount before tax (($53)).
  • Sales Tax Payable (a liability account) is debited for the sales tax amount (($3.18)).
  • Cash (an asset account) is credited for the total refund amount (($56.18))

Answer:

Debit Sales Returns and Allowances ($53), debit Sales Tax Payable ($3.18), credit Cash ($56.18)