Kramerica Inc sold 350 oil drums to Thompson Manufacturing for
Kramerica, Inc., sold 350 oil drums to Thompson Manufacturing for $75 each. In addition to the $75 sale price per drum, there is a $1 per drum federal excise tax and a 7 percent state sales tax. What journal entry should be made to record this sale?
a. Debit Accounts Receivable 28,438; credit Sales Revenue 28,438.
b. Debit Accounts Receivable 26,250; credit Sales Revenue 26,250.
c. Debit Accounts Receivable 28,438; credit Excise Taxes Payable (Federal) 350; credit Sales Taxes Payable (State) 1,838; credit Sales Revenue 26,250.
d. Debit Accounts Receivable 26,250; debit Taxes Expense 2,188; credit Excise Taxes Payable (Federal) 350; credit Sales Taxes Payable (State) 1,838; credit Sales Revenue 26,250.
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