Beacham Hardware, Inc., sells merchandise in a state that has a 6 percent sales tax. On 2010 July 1, it sold goods with a sales price of USD 20,000 on credit. Sales taxes collected are recorded in a separate account. Assume that sales for the entire month were USD 400,000. On 2010 July 31, the company remitted the sales taxes collected to the state taxing agency.
a. Prepare the general journal entries to record the July 1 sales revenue and sales tax payable. Also prepare the entry to show the remittance of the taxes on July 31.
b. Now assume that the merchandise sold also is subject to federal excise taxes of 10 percent in addition to the 6 percent sales tax. The company remitted the federal excise taxes collected to the proper agency on July 31. Show the entries on July 1 and July 31.