Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $10,000 of cash sales that are subject to an 10% sales tax, what is the journal entry to record the cash sales?
A. Debit Sales Taxes Payable $1000; debit Cash $9000; credit Sales $10,000.
B. Debit Cash $10,000; credit Sales $10,000; and record the taxes when paid.
C. Debit Accounts Receivable $11,000; credit Sales $10,000; credit Sales Taxes Payable $1000.
D. Debit Cash $10,000; credit Sales $9000; credit Sales Taxes Payable $1000.
E. Debit Cash $11,000; credit Sales $10,000; credit Sales Taxes Payable $1000.
Answer: E
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