A company is a is a retailer of wall, mantle, and grandfather clocks. Assume tha

Question

A company is a is a retailer of wall, mantle, and grandfather clocks. Assume that a grandfather clock was sold for $13,000 cash plus 5 percent sales tax. The clock had originally cost Heines $9,000. Assume Heines uses a perpetual inventory system.

1) Indicate the effects of the amounts for the above transactions.

2. Prepare the journal entries related for the above transactions for the following:

a)Record the sales revenue of $13,000 plus 5 percent sales tax.

b)Record the cost of goods sold of $9,000.

1) Indicate the effects of the amounts for the above transactions.

Explanation / Answer

Ans 1 Assetts =    Liabilities + Sales Revenue 13650 650 13000 Ans 2 Dr Cr a Cash $13,650 Sales Revenue 13000 Sales tax Liability(13000*5% 650 b Cost of Good Sold $9,000 Inventory $9,000

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