Exercise 7-4A (Algo) Recognizing sales tax payable LO 7-2 The following selected transactions apply to Topeca Supply for November and December, 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. 1. Cash sales for November, Year 1 were $64,500 plus sales tax of 8 percent. 2. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1. 3. Cash sales for December, Year 1 were $82,000 plus sales tax of 8 percent. Required a. Show the effect of the above transactions on a statements model like the one shown as follows. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). If an element is not affected by the event, leave the cell blank. b. What was the total amount of sales tax paid in Year 1? c. What was the total amount of sales tax collected in Year 1? d. What is the amount of the sales tax liability as of December 31, Year 17 e. On which financial statement will the sales tax liability appear? Complete this question by entering your answers in the tabs below. Req A Req B to E Show the effect of the above transactions on a statements model like the one shown as follows. In the Cash Flow column, Indicate whether the item is an operati activity (OA), an investing activity (IA), or a financing activity (FA). If an element is not affected by the event, leave the cell blank (Enter any decreases to accou balances and cash outflows with a minus sign. Not all cells will require entry.) TOPECA SUPPLY Horizontal Statements Model Event Assets Cash Liabilities Sales Tax Payable Stockholder's Equity Income Statement Statement of Common Stock Retained Revenue Earnings Expense Net Income Cash Flows Show le nces Show the effect of the above transactions on a statements model like the one shown as follows. In the Cash Flow column, Indicate whether the item is an oper activity (OA), an investing activity (IA), or a financing activity (FA). If an element is not affected by the event, leave the cell blank. (Enter any decreases to ace balances and cash outflows with a minus sign. Not all cells will require entry.) Show TOPECA SUPPLY Horizontal Statements Model Event Assets Cash Liabilities + Sales Tax Payable Stockholder's Equity Common Stock Retained Revenue 1. 23 69,000 (5,160) 5,160+ Earnings 64,500 Income Statement -Expense Statement of Net Income Cash Flows 64,500 64,500 69.660 OA (5,160)+ (5,100)OA 89,640- 6,640 83,000 83,000- 83,000 89,640 OA RA Req B to E> b. Sales tax paid c. Sales tax collected d. Sales tax liability e. The liability is shown on the $ 5,160 $ 11,800 S 6,640 balance sheet