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QuestionCalculate the sales tax balance for Valerie's business as of 31 March 20X6, given sales and purchases at 17.5%17.5\%. Choices: A \$7,639 Dr, B \$1,875 Dr, C \$7,639 Cr, D \$1,875 Cr.

Studdy Solution

STEP 1

Assumptions1. The sales made by Valerie were all subject to a sales tax of17.5% . The sales amounts are given as both excluding and including sales tax3. The purchases made by Valerie were all subject to a sales tax of17.5%
4. The purchase amounts are given as both excluding and including sales tax5. The balance on the sales tax account is the difference between the sales tax collected from sales and the sales tax paid on purchases

STEP 2

First, we need to calculate the sales tax for the sales amounts that are given excluding sales tax. We can do this by multiplying the sales amount by the sales tax rate.
Sales tax=Sales amounttimesSales tax rateSales\, tax = Sales\, amount \\times Sales\, tax\, rate

STEP 3

Now, plug in the given values for the sales amounts and sales tax rate to calculate the sales tax.
Sales tax=$10,000times17.5%Sales\, tax = \$10,000 \\times17.5\%Sales tax=$6,745times17.5%Sales\, tax = \$6,745 \\times17.5\%

STEP 4

Convert the percentage to a decimal value.
17.%=0.17517.\% =0.175Sales tax=$10,000times0.175Sales\, tax = \$10,000 \\times0.175Sales tax=$6,745times0.175Sales\, tax = \$6,745 \\times0.175

STEP 5

Calculate the sales tax amounts.
Sales tax=$10,000times0.175=$1,750Sales\, tax = \$10,000 \\times0.175 = \$1,750Sales tax=$,745times0.175=$1,180.375Sales\, tax = \$,745 \\times0.175 = \$1,180.375

STEP 6

For the sales amounts that are given including sales tax, we need to calculate the sales tax by subtracting the amount excluding sales tax from the total amount. The amount excluding sales tax can be calculated by dividing the total amount by1 plus the sales tax rate.
Sales tax=Sales amount−Sales amount1+Sales tax rateSales\, tax = Sales\, amount - \frac{Sales\, amount}{1 + Sales\, tax\, rate}

STEP 7

Now, plug in the given values for the sales amounts and sales tax rate to calculate the sales tax.
Sales tax=$7,402−$7,4021+0.175Sales\, tax = \$7,402 - \frac{\$7,402}{1 +0.175}Sales tax=$11,632−$11,6321+0.175Sales\, tax = \$11,632 - \frac{\$11,632}{1 +0.175}

STEP 8

Calculate the sales tax amounts.
Sales tax=$7,402−$7,4021.175=$1,059.14893617Sales\, tax = \$7,402 - \frac{\$7,402}{1.175} = \$1,059.14893617Sales tax=$11,632−$11,6321.175=$1,660.85106383Sales\, tax = \$11,632 - \frac{\$11,632}{1.175} = \$1,660.85106383

STEP 9

Add up all the sales tax amounts to get the total sales tax collected from sales.
Total sales tax from sales=$,750+$,180.375+$,059.14893617+$,660.85106383Total\, sales\, tax\, from\, sales = \$,750 + \$,180.375 + \$,059.14893617 + \$,660.85106383

STEP 10

Calculate the total sales tax from sales.
Total sales tax from sales=$,750+$,180.375+$,059.14893617+$,660.85106383=$5,650.375Total\, sales\, tax\, from\, sales = \$,750 + \$,180.375 + \$,059.14893617 + \$,660.85106383 = \$5,650.375

STEP 11

Next, we need to calculate the sales tax for the purchase amounts that are given excluding sales tax. We can do this by multiplying the purchase amount by the sales tax rate.
Sales tax=Purchase amounttimesSales tax rateSales\, tax = Purchase\, amount \\times Sales\, tax\, rate

STEP 12

Now, plug in the given values for the purchase amount and sales tax rate to calculate the sales tax.
Sales tax=$15,000times17.5%Sales\, tax = \$15,000 \\times17.5\%

STEP 13

Calculate the sales tax amount.
Sales tax=$15,000times0.175=$2,625Sales\, tax = \$15,000 \\times0.175 = \$2,625

STEP 14

For the purchase amounts that are given including sales tax, we need to calculate the sales tax by subtracting the amount excluding sales tax from the total amount. The amount excluding sales tax can be calculated by dividing the total amount by plus the sales tax rate.
Sales tax=Purchase amount−Purchase amount+Sales tax rateSales\, tax = Purchase\, amount - \frac{Purchase\, amount}{ + Sales\, tax\, rate}

STEP 15

Now, plug in the given values for the purchase amounts and sales tax rate to calculate the sales tax.
Sales tax=$12,455−$12,455+0.175Sales\, tax = \$12,455 - \frac{\$12,455}{ +0.175}Sales tax=$11,338−$11,338+0.175Sales\, tax = \$11,338 - \frac{\$11,338}{ +0.175}Sales tax=$9,870−$9,870+0.175Sales\, tax = \$9,870 - \frac{\$9,870}{ +0.175}

STEP 16

Calculate the sales tax amounts.
Sales tax=$12,455−$12,455.175=$,779.148936Sales\, tax = \$12,455 - \frac{\$12,455}{.175} = \$,779.148936Sales tax=$11,338−$11,338.175=$,618.29787234Sales\, tax = \$11,338 - \frac{\$11,338}{.175} = \$,618.29787234Sales tax=$9,870−$9,870.175=$,407.23404255Sales\, tax = \$9,870 - \frac{\$9,870}{.175} = \$,407.23404255

STEP 17

Add up all the sales tax amounts to get the total sales tax paid on purchases.
Total sales tax on purchases=$2,625+$,779.14893617+$,618.29787234+$,407.23404255Total\, sales\, tax\, on\, purchases = \$2,625 + \$,779.14893617 + \$,618.29787234 + \$,407.23404255

STEP 18

Calculate the total sales tax on purchases.
Total sales tax on purchases=$2,625+$,779.14893617+$,618.29787234+$,407.23404255=$7,430.68085106Total\, sales\, tax\, on\, purchases = \$2,625 + \$,779.14893617 + \$,618.29787234 + \$,407.23404255 = \$7,430.68085106

STEP 19

Finally, we can calculate the balance on the sales tax account by subtracting the total sales tax paid on purchases from the total sales tax collected from sales.
Balance on sales tax account=Total sales tax from sales−Total sales tax on purchasesBalance\, on\, sales\, tax\, account = Total\, sales\, tax\, from\, sales - Total\, sales\, tax\, on\, purchases

STEP 20

Plug in the values for the total sales tax from sales and the total sales tax on purchases to calculate the balance on the sales tax account.
Balance on sales tax account=$5,650.375−$7,430.68085106Balance\, on\, sales\, tax\, account = \$5,650.375 - \$7,430.68085106

STEP 21

Calculate the balance on the sales tax account.
Balance on sales tax account=$5,650.375−$7,430.68085106=−$1,780.30585106Balance\, on\, sales\, tax\, account = \$5,650.375 - \$7,430.68085106 = -\$1,780.30585106The balance on the sales tax account as at31 March20X6 was a debit of approximately \$1,780.31. Looking at the options given, the closest is option B, \$1,875 Dr.

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