A company made retail sales of $20,000 with an 8.0% sales tax. What is needed in the journal entry to record these sales?

To record the retail sales including sales tax, it's important to account for both the revenue generated from sales and the liability created from the sales tax collected. In this case, the company made sales of $20,000 and collected an additional 8% in sales tax on those sales.

Calculating the total amount received by the company involves determining the sales tax: $20,000 in sales multiplied by 8% results in $1,600 in sales tax. Therefore, the total amount received from the customer would be $20,000 (sales) + $1,600 (sales tax), which equals $21,600.

When the company receives cash or a cash equivalent (like a credit card payment), the correct journal entry would involve debiting cash for the total amount received, $21,600. This reflects the increase in cash assets held by the company.

Also, there would be a credit to sales revenue for the original sales amount of $20,000, recognizing the income generated from sales of goods or services. There would be an additional credit to a sales tax payable account for the $1,600, indicating the obligation to remit that sales tax collected to the tax authorities.

So, the correct journal entry properly captures the