Business Finance Homework Help

CP 9‐4

Smith Corporation purchases merchandise on account from a supplier
on June 30, 2019 for $4,000. On July 5, merchandise is sold for $5,000
plus state sales tax (5%) to Customer A on account. Assume that the
perpetual inventory method is used.

Required:

1. Prepare the journal entry to record the $4,000 purchase from the
supplier.

2. Prepare the journal entry to record the sale to Customer A.

3. Prepare the journal entry to record payment of sales tax on these to
the State X on July 31. A description is not necessary.
4. How much sales tax revenue or expense will Smith Corporation
report on its income statement?

Descriptions and general ledger account numbers are not necessary for
journal entries.