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 $20,000 cash plus 4 percent sales tax. The click had originally cost Heines $16,000. Assume Heines uses a perpetual inventory system. 1. Indicate the effects of the amounts for the above transactions. (Enter any decreases to account balances with a minus sign.) Assets, Liabilities, 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.) Journal Worksheet: Transaction, General Journal (1) and (2).

Explanation / Answer

Sales Price 20000 Cost 16000 Sales Tax 4% The cash we receive will be in excess of the sales price To solve: 20000+(20000*.04) 20800 2 Cash 20800 Sales tax payable 800 Sales Revenue 20000 Cost of goods sold 16000 Inventory 16000

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