Candy's Video Includes the Amount of Sales Taxes Collected Directly

question 83

Short Answer

Candy's Video includes the amount of sales taxes collected directly in the price charged for merchandise, and the total amount is credited to Sales. During January, Sales was credited for $310,117.50. The January 31 adjusting entry to account for a 5% state sales tax should be

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Definitions:

Inferior Good

A type of good whose demand decreases when consumers' income increases, opposite to normal goods.

Demand Elastic

A measure of how sensitive the quantity demanded of a good or service is to a change in its price.

Supply Inelastic

A situation where the quantity supplied of a good is not significantly affected by changes in its price.

Cross Elasticity

A gauge for the reaction in the demand for one item when there's a price alteration in another item.