Question: Journalizing and Reporting Transactions Involving Sales Taxes The Ferrer School (TFS) provides services to customers and collects a 5 percent state sales tax. The business entered into the following transactions.
a. During January 2009, TFS sold $12,000 worth of services to customers and collected $12,600 cash.
b. On February 1, 2009, TFS made a sales tax remittance for sales taxes collected during January 2009. Required:
1. Give the journal entries to record these events.
2. Describe the impact of these events on the current ratio assuming current assets were $200,000 and current liabilities were $100,000 on January 1, 2009.