The Route 66 Gift Shop, which records sales and sales tax separately, had sales on account of $1,500 and cash sales of $1,000. The state sales tax is 8%. The journal entry to record the sales would include a:

A) Debit to Sales Tax Payable for $75.

B) Debit to Cash of $1,000.

C) Credit to Sales Revenue of $2,700.

D) Debit to Accounts Receivable of $1,620 and a debit to Cash of $1,080.

Answer: D

Suppose you buy dinner for $23.75 that includes an 8% sales tax. How much did the restaurant charge you for the dinner (excluding any tax) and how much does the restaurant owe for sales tax?

A) $23.75 for dinner and $1.90 for sales tax.

B) $23.75 for dinner and no sales tax.

C) $21.85 for dinner and $1.90 for sales tax.

D) $21.99 for dinner and $1.76 for sales tax.

Answer: D

If a 6% sales tax is recorded together with sales revenue in the sales account and the balance at the end of the month is $5,300, how much sales tax is payable?

A) $600

B) $280

C) $318

D) $300

Answer: D