The following selected transactions apply to Valley Supply for November and December 2013. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month.
1. Cash sales for November 2013 were $146,000 plus sales tax of 7 percent. 2. Valley Supply paid the November sales tax to the state agency on December 10, 2013. 3. Cash sales for December 2013 were $175,000 plus sales tax of 7 percent.
Required:
a. Record the above transactions in general journal form.
b. Show the effect of the above transactions on a statements model like the one shown below.
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c. What was the total amount of sales tax paid in 2013?
d. What was the total amount of sales tax collected in 2013?
e. What amount of sales tax expense will be reported on the 2013 income statement?