Sales Taxes
Response to the following problem:
The Mauldin Company makes sales on which a 5% sales tax is assessed. The following summary transactions were made during 2010:
1. Sales for cash of $1,665,400, excluding sales taxes
2. Sales on credit of $2,820,500, excluding sales taxes
3. Sales taxes of $168,220 were paid to the state government during 2010
Required
1. Prepare journal entries to record the preceding transactions.
2. Show how the unpaid sales taxes would be reported on the December 31, 2010 balance sheet of Mauldin.