Jackson Co

question 51

Multiple Choice

Jackson Co. sold merchandise on account to S. Thomas, invoice no. 121, for $125.50, plus 5% sales tax. Which of the following is true about the journal entry to record this transaction?

• A) Debit to Sales for $125.50, Credit to Sales Tax Payable for $6.275
• B) Debit to Sales Tax Payable for $125.50, Credit to Accounts Receivable for $6.275
• C) Debit to Accounts Receivable for $131.775, Credit to Sales Tax Payable for $6.275
• D) Debit to Sales Tax Payable for $131.775, Credit to Accounts Receivable for $6.275

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Definitions:

Unconscionable

Refers to actions or terms in a contract that are so unjust or overwhelmingly one-sided in favor of the party with more power that they are contrary to good conscience.

Market Price

The current price at which an asset or service can be bought or sold in a public market.

Output Contract

An agreement where one party commits to sell, and the other to buy, all of a particular producer's output, ensuring a market for the seller and supply for the buyer.

Reasonably Proportionate

A criterion for determining whether a particular measure or action is fair and appropriate in its scope relative to its intended outcome or objective.