Chapter 11, Problem 3Q

(a)

To determine

Income Statement: A part of financial statements, used to present the net income of a business is called income statement. Temporary accounts like income and expenses are listed on it.

Sales Tax: The additional amount paid by the buyer over and above the cost of goods plus profit margin of the manufacturer is known as sales tax. It is levied by government regulatory bodies.

To Explain: Sales taxes are part of income statement as expenses or not.

b.

To determine

To Record: The journal entry for cash proceeds from sales of $8,400 that includes $400 of sales taxes.