CH#5 Practice

Prepared by: Muhammad Azeem Tariq

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azeemtariq89@gmail.com
  Tax on sales (Output tax):

Exclusive = = $95,000

Tax = Inclusive – Exclusive

11910 Tax = $109,250 – $95,000
Tax = $14,250

Tax on purchases (Input tax):

Sales Tax account
Tax = Net value x Tax rate
$ $ Tax = $64000 x 15%
Input tax 9600 Balance b/d 4540 Tax = $9,600
Cash paid 11910 ? Output tax 14250
Balance c/d 2720
21510 21510
 Total sales = $140,000
Sales exempted from tax= $20,000
Sales with Tax = $120,000
 Tax on sales (Output tax):

Exclusive = = $100,000
Sales Tax account
Tax = Inclusive – Exclusive
$ $
Tax = $120,000 – $100,000
Input tax 13000 Output tax 20000 Tax = $20,000
Cash paid 7000 ?
Tax on purchases (Input tax):

20,000 20,000 Tax = Net value x Tax rate

Tax = $65000 x 20%
Tax = $13,000