The following selected transactions apply to Fast Stop for November and December 2016.
November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month.
1. Cash sales for November 2016 were $85,000 plus sales tax of 8 percent.
2. Fast Stop paid the November sales tax to the state agency on December 10, 2016.
3. Cash sales for December 2016 were $98,000 plus sales tax of 8 percent.
a. Record the above transactions in general journal form.
b. Show the effect of the above transactions on a horizontal statements model like the one shown below.
c. What was the total amount of sales tax paid in 2016?
d. What was the total amount of sales tax collected in 2016?
e. What is the amount of the sales tax liability as of December 31, 2016?
f. On what financial statement will the sales tax liability appear?