Heines Clocks is a retailer of wall, mantle, and grandfather clocks and is locat

Question

Heines Clocks is a retailer of wall, mantle, and grandfather clocks and is located in the Empire Mall in Sioux Falls, South Dakota. Assume that a grandfather clock was sold for $16,500 cash plus 4 percent sales tax. The clock had originally cost Heines $12,500. Assume Heines uses a perpetual inventory system.

Indicate the effects of the amounts for the above transactions. (Enter any decreases to account balances with a minus sign.)

Stockholders' Equity

2. Prepare the journal entries related for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. Record the sales revenue of $16,500 plus 4 percent sales tax.

b. Record the cost of goods sold of $12,500.

Indicate the effects of the amounts for the above transactions. (Enter any decreases to account balances with a minus sign.)

Explanation / Answer

The cash we receive will be in excess of the sales price

To solve:

Sale price =16500

Sales Tax 4% of 16500

=16500*4%

=660

Total Cash received

=16500+660

=$ 17,160

Journal Entry for the above transaction is as follow

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