Cantrell Company Is Required by Law to Collect and Remit

question 177

Multiple Choice

Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $8,000 of cash sales that are subject to an 8% sales tax, what is the journal entry to record the cash sales?

• A) Debit Accounts Receivable $8,640; credit Sales $8,000; credit Sales Taxes Payable $640.
• B) Debit Cash $8,000; credit Sales $7,360; credit Sales Taxes Payable $640.
• C) Debit Sales Taxes Payable $640; debit Cash $7,360; credit Sales $8,000.
• D) Debit Cash $8,000; credit Sales $8,000; and record the taxes when paid.
• E) Debit Cash $8,640; credit Sales $8,000; credit Sales Taxes Payable $640.

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Definitions:

Price Range

The spread between the highest and lowest price at which a product, service, or asset is traded or offered for sale.

Ed

A common abbreviation for price elasticity of demand, which measures how much the quantity demanded of a good responds to a change in its price.

Total Revenues

The total amount of money generated by a business from the sale of goods and services before any costs or expenses are deducted.

Unit Elasticity

Unit elasticity refers to a situation where a change in the price of a good or service results in a proportionally equal change in the quantity demanded or supplied, indicating a unitary elasticity of demand or supply.