When merchandise is sold on account and sales tax is also collected:
(a) accounts receivable is credited for the total sale and sales tax.
(b) the accounts receivable balance is increased.
(c) sales is debited for the price of the goods.
(d) the sales tax is not reported.

B) The accounts receivable balance is increased

Explanation:

When merchandise is sold on account and sales tax is also collected so

following entry is made:

Accounts receivable Debit

Sales                          Credit

Sales tax payable     Credit

The above entry depicts that accounts receivable is debited so Option A is wrong as it calls for credit of accounts receivable.

Option C is also wrong as it states that sales is debited as a result of mentioned transaction.

Option D is wrong as Sales tax payable is recorded with an amount of sales payable to government (federal / state), total of both sales and sales tax is debited to accounts receivable with corresponding credit to sales and sales tax.

answer; that person may have a larger tax bill to pay on income taxes;

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