Dionysus Diamonds, Inc. had sales on account of $16,500 which were subject to state sales tax of 8%. The entry to record the sales would be to:
A) debit Accounts Receivable $16,500; debit Sales Tax Payable $1,320; credit Sales Revenue $17,820.
B) debit Accounts Receivable $17,820; credit Sales Revenue $16,500; credit Sales Tax Payable $1,320.
C) debit Accounts Receivable $16,500; credit Sales Revenue $16,500.
D) debit Accounts Receivable $17,820; credit Sales Revenue $17,820.
B) debit Accounts Receivable $17,820; credit Sales Revenue $16,500; credit Sales Tax Payable $1,320.
Explanation: sales × sales tax rate = sales tax payable; sales + sales tax payable = A/R. Ex: $16,500 × 8% = $1,320; $16,500 + $1,320 = $17,820
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