Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 13

Recording Sales and State Tax
Ahlers Clocks is a retailer of wall, mantle, and grandfather clocks and is located in the Empire Mall in Sioux Falls, South Dakota. Assume that a grandfather clock was sold for $10,000 cash plus 4 percent sales tax. The clock had originally cost Ahlers $6,000. Show the accounting equation effects and prepare the journal entries related to this transaction. Assume Ahlers uses a perpetual inventory system, as explained in Chapter 6.