Exercise $7-4$A $($Algo$)$ Recognizing sales tax payable LO $7-2$

The following selected transactions apply to Topeca Supply for November and Decembec. Year $1.$ 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.

$2.$ Topeca Supply paid the November sales tax to the state agency on December $10.$ Year $1.$

$3.$ Cash sules for December, Year t$,$ were $$80\mathrm{.}500$ plus sales tax of $7$ percent.

Required:

a$.$ Use a hortroctal financlal statements model to show how each event affects the balance sheet, income statement and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash fiows column, classify the cash flows as operating activeles $($OA$),$ investing actilles $($A$).$ or financing activities $($FA$)$

b$.$ What was the total amount of sales tar paid in Year $1?$

c$.$ What was the total amount of sales tax collected In Year i$?$

d$.$ What is the guount of the siles tas hably as of December $31.$ Year $1?$

e$.$ On which financlal statement will the sales tha llablity appear?