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ACCA Applied Knowledge · Financial Accounting · Double-entry bookkeeping principles including the maintenance of accounting records

The sales day book of Kestrel Co for March shows goods total $48,000 and sales tax $9,600, so invoices total $57,600. Which is the correct posting to the general ledger?

Debit receivables control with the gross $57,600, credit sales with the net $48,000, and credit the sales tax account with $9,600. The tax is a liability to the tax authority, not revenue, so revenue is recorded net of it.

  1. ADebit receivables control $57,600; credit sales $48,000; credit sales tax $9,600Correct
  2. BDebit receivables control $48,000; debit sales tax $9,600; credit sales $57,600
  3. CDebit sales $48,000; debit sales tax $9,600; credit receivables control $57,600
  4. DDebit receivables control $57,600; credit sales $57,600

Explanation

Credit sales increase receivables by the gross amount (debit $57,600). Revenue is credited with the net $48,000 and the sales tax liability with $9,600. The option debiting sales and crediting receivables reverses the entries, which would be a sales return posting.

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