down the river canoe sold merchandise for cash to low rent tours for $150, plus sales tax of $11. the…

down the river canoe sold merchandise for cash to low rent tours for $150, plus sales tax of $11. the journal entry for down the river canoe to record this transaction is: a. debit cash, $161; credit sales, $150, sales tax payable, $11. b. debit cash, $161; credit accounts receivable/low rent tours, $161. c. debit accounts receivable/low rent tours, $161; credit cash, $161. d. debit sales, $150, sales tax payable, $11; credit cash, $161.

down the river canoe sold merchandise for cash to low rent tours for $150, plus sales tax of $11. the journal entry for down the river canoe to record this transaction is: a. debit cash, $161; credit sales, $150, sales tax payable, $11. b. debit cash, $161; credit accounts receivable/low rent tours, $161. c. debit accounts receivable/low rent tours, $161; credit cash, $161. d. debit sales, $150, sales tax payable, $11; credit cash, $161.

Answer

Answer:

A. debit Cash, $161; credit Sales, $150, Sales Tax Payable, $11.

Explanation:

Step1: Analyze cash received

The total cash received is the sum of the sales amount and sales - tax. So, $150 + 11=161$. Cash is an asset, and when it increases, we debit it for $161$.

Step2: Record sales amount

The sales amount of $150$ is a revenue. Revenues increase equity, and we credit the Sales account for $150$.

Step3: Record sales - tax liability

The sales tax of $11$ is a liability that the company owes to the tax authority. Liabilities increase on the credit side, so we credit Sales Tax Payable for $11$.