ACCA · Question 04 · The use of double-entry and accounting systems
Section A
AgriGrow Ltd sells specialized farming equipment. A customer purchases a tractor for $55,200, which is inclusive of a 15% sales tax.
What is the correct double entry to record this cash sale in AgriGrow Ltd's books?
Answer options:
Debit Cash $55,200; Credit Sales $55,200
Debit Cash $55,200; Credit Sales $46,920; Credit Sales Tax Account $8,280
Debit Cash $55,200; Credit Sales $48,000; Credit Sales Tax Account $7,200
Debit Sales $48,000; Debit Sales Tax Account $7,200; Credit Cash $55,200
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