Kathy's corner store has total cash sales for the month of $35,000 excluding sales taxes. if the sales tax rate is 6%, which journal entry is needed? (ignore cost of goods sold.)

a. debit cash $35,000 and credit sales revenue $35,000
b. debit cash $36, 050, credit sales revenue $35,000 and credit sales tax payable $1, 050
c. debit cash $33, 950, debit sales tax receivable for $1, 050 and credit sales revenue for $35,000
d. debit cash $36, 050, credit sales revenue $36, 050

none of the answers is correct, the correct answer should be:

Explanation:

If Kathy sold $35,000 during the month and the sales tax is 6%, then she will have collected $37,100 in cash.

$35,000 belong to her as sales revenue and $2,100 (= $35,000 x 6%) is money she owes as sales taxes.

Since cash is an asset, when it increases it must be debited.

When revenue increases, it must be credited.

Sales tax payable is a liability, when it increases it must be credited.

Dr Cash 37,100 (= 35,000 + 2,100)

Cr Sales Revenue 35,000 (net revenue)

Cr Sales Tax Payable 2,100 (= 35,000 x 6%)

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