Vail Book Mart sells books and other supplies to students in a state where the sales tax rate is 7 percent. Vail engaged in the followingtransactions during the year. Sales tax of 7 percent is collected on all sales.1. Book sales, not including sales tax, for the year amounted to $275,000 cash.2. Cash sales of miscellaneous items for the year were $146,000, not including tax.3. Cost of goods sold was $211,000 for the year.4. Paid $130,000 in operating expenses for the year.5. Paid the sales tax collected to the state agency.Requireda. What is the total amount of sales tax Vail Book Mart collected and paid for the year?b. What is the Vail Book Mart's net income for the year?a. Sales tax collectedb. Net income

solution : a) given : sales tax rate =7% sales tax is collected on all the sales calculation of…

Answered: Vail Book Mart sells books and other…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Vail Book Mart sells books and other supplies to students in a state where the sales tax rate is 6 percent. Vail Book Mart engaged in the following transactions for Year 1. Sales tax of 6 percent is collected on all sales. Book sales, not including sales tax, for Year 1 amounted to $279,000 cash. Cash sales of miscellaneous items in Year 1 were $151,000, not including tax. Cost of gods sold was $211,000 for the year. Paid $130,000 in operating expenses for the year. Paid the sales tax collected to the state agency. What is the total amount of sales tax Vail Book Mart collected and paid for the year? Prepare the journal entries for the preceding transactions. What is Vail Book Mart's net income for the year?
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