Answer
Step1:
· Seller treat it as a current liability and record it in sales tax payable account.
· Buyer pays the amount as part of purchase and record as purchase cost.
Step2:
Cash 8,550 dollars
Sales 8,000 dollars
Sales tax payable 550
Work Step by Step
Step1: The sales tax is not an expense in the income statement. It is a part on sales and is treated as follows
Step2: To record daily sales and sales tax
