A Business Maintains Subsidiary Accounts for Each of Its Customers

question 207

Essay

A business maintains subsidiary accounts for each of its customers.On April 7,the business provides $2,500 in services to Anne Hill on account.The business sells $4,000 (sales price)of merchandise inventory to Ron Wilson on account.
The full amount was collected from each customer on April 26.
Prepare the journal entries for April 7 and April 26.Ignore Cost of Goods Sold and omit explanations.
$$\begin{array} { | l | l | l | l | } \hline \text { Date } &\quad\quad\quad\quad\quad\quad\quad\quad & \text { Debit } & \text { Credit } \\\hline & & & \\\hline & & & \\\hline & & & \\\hline & & & \\\hline & & & \\\hline & & & \\\hline & & & \\\hline & & & \\\hline\end{array}$$

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Definitions:

Tax Shifting

Occurs when households can alter their behavior and do something to avoid paying a tax.

Avoid Paying

Strategies or actions taken to minimize or evade expenses, taxes, or other financial obligations.

Luxury Tax

A tax imposed on expensive goods and services, often considered non-essential, as a means of raising government revenues without placing the burden on essential items.

Tax Incidence

The distribution of the economic burden of a tax between buyers and sellers, depending on the elasticity of demand and supply.