Suppose you buy lunch for $8.39 that includes a 5% sales tax. How much did the restaurant charge you

Suppose you buy lunch for $8.39 that includes a 5% sales tax. How much did the restaurant charge you for the lunch (excluding any tax) and how much does the restaurant owe for sales tax? (Do not round intermediate calculations. Round the answers to 2 decimal places.)

A) $8.39 for lunch and $0.42 for sales tax.

B) $8.39 for lunch and no sales tax.

C) $8.81 for lunch and $0.42 for sales tax.

D) $7.99 for lunch and $0.40 for sales tax.

Answer: D

When a company collects sales tax from a customer, the event results in a(n) ________ in Cash and a(n) ________ in Sales Tax Payable:

A) increase decrease

B) increase increase

C) decrease increase

D) decrease decrease

Answer: B

When a company collects sales tax from a customer, the event is recorded by:

A) A debit to Sales Tax Expense and a credit to Sales Tax Payable.

B) A debit to Cash and a credit to Sales Tax Payable.

C) A debit to Sales Tax Payable and a credit to Sales Tax Expense.

D) A debit to Sales Tax Payable and a credit to Cash.

Answer: B