WorksheetsFA - ch. 5 Sales Tax
Total questions: 10
Worksheet time: 20mins
During the three months ended 30 June 20X2, John makes sales (including sales tax) of $55,000 and purchases (excluding sales tax) of $33,000.
Assuming that all transactions are subject to sales tax at 10%, how much does John owe the tax authority at 30 June 20X2?
$1,700
$2,000
$2,200
$2,500
Which of the following statements about discounts received is/are true?
1. When a settlement discount is offered the purchase is recognised net of the discount
2. When a trade discount is received a purchase is recognised at the net amount
1 only
2 only
Both 1 and 2
Neither 1 nor 2
A clothes manufacturer offers clothes to retailer customers with a 10% trade discount on list price. It expects all major customers to take advantage of a further 5% prompt payment discount for settlement within 10 days.
Goods with a list price of $1,000 are sold to a major customer.
What entry, if any, will be required to the revenue account if the discount is not taken?
Mingyue purchased goods with a price of $500 before any available trade discount. Due to the volume of goods Mingyue expects to purchase, her supplier has agreed a trade discount of 10%.
Which is the correct journal entry for Mingyue to account for this purchase in her ledger accounts?
DR Purchases $500, CR Trade payables $500
DR Purchases $500, CR Trade payables $450, CR Discounts received $50
DR Purchases $450, DR Discounts allowed $50, CR Payables $500
DR Purchases $450, CR Trade payables $450
Liu purchased goods for $560 net of sales tax. Sales tax is 20%. Which of the following statements about Liu’s sales tax is true?
Liu paid $112 output tax
Liu paid $112 input tax
Liu paid $93 direct tax
Liu paid $93 cumulative tax
Vlad sells his goods with a settlement (prompt payment) discount of 5% if his customers pay within 14 days. Vlad invoices customers who have a record of paying within 14 days net of settlement discount. Customer A always pays in time to obtain the discount. On May 10, Vlad received a payment for $285 from Customer A. The payment was in respect of an invoice which was issued on May 2.
What journal entry should Vlad post in his ledger accounts in respect of this payment?
DR Bank $285, CR Trade Receivables $285
DR Trade Receivables $285, CR Bank $285
DR Bank $300, CR Trade Receivables $300
DR Trade Receivables $300, CR Bank $300
Mona purchased goods on credit for $450 plus sales tax. Sales tax is 20%.
What journal entry would be posted to record this purchase transaction?
DR Purchases $540, CR Trade payables $540
DR Purchases $540, CR Sales tax control account $90, CR Trade payables $450
DR Purchases $450, CR Trade payables $450
DR Purchases $450, DR Sales tax control account $90, CR Trade payables $540
Sales returns of $500 have arrived at Akash‘s business. These sales were made on credit. What impact will these sales returns have on the accounts?
Sales balance will decrease and the bank balance will decrease
Sales returns account will increase and the bank balance will decrease
Sales returns account will increase and trade receivables balance will decrease
Sales balance will decrease and trade receivables balance will increase
Shadi has purchased goods for $600 with a prompt payment discount of 10% if she settles the debt within 10 days.
Which TWO of the following statements are true if Shadi settles the debt within 10 days?
Shadi will pay $600
Shadi will credit the bank ledger account $540
Shadi will debit trade payables $540
The purchase invoice will be recorded as $600
Saleem sold goods on credit for $2,600 net of sales tax. Sales tax is 20%. How much should be recorded for sales and sales tax?
Sales: CR $2,600. Sales tax: CR $520
Sales: CR $3,120. Sales tax: CR $520
Sales: CR $2,600. Sales tax: DR $520
Sales: CR $3,120. Sales tax: DR $520
