Determine the account and amount to be debited and the account and amount to be credited for the following transaction of Mario's Electronics. A. Gave a $300 allowance to a credit customer for damaged merchandise. The original sale involved a 10 percent sales tax.B. Accepted a return of $150 in merchandise from a credit customer. The original sale involved 5 percent sales tax.C. Sold $200 in merchandise for cash. The transaction involved 8 percent sales tax.D. Received a check for $50 from a credit customer on account.E. Sold $1,200 in merchandise on credit. The transaction did not involve sales tax.

Question

What will be an ideal response?

Answer 1

A. Debit Sales Returns and Allowances $300, debit Sales Tax Payable $30; credit Accounts Receivable $330
B. Debit Sales Returns and Allowances $150, debit Sales Tax Payable $7.50; credit Accounts Receivable $157.50
C. Debit Cash $216; credit Sales $200 and credit Sales Tax Payable $16
D. Debit Cash $50; credit Accounts Receivable $50
E. Debit Accounts Receivable $1,200; credit Sales $1,200

Feedback: 
A. $300 + ($300 x .10) = $330
B. $150 + ($150 x .05) = $157.50
C. $200 + ($200 x .08) = $216
D. The amount includes the sales tax, which has already been recorded
E. The transaction did not involve sales tax.