Sales (including sales tax) amounted to $6,903, and purchases (excluding sales tax) amounted to $ 4,500. What is the balance on the sales tax account, assuming all items are subject to sales tax at 14.5%?
Answer
Output sales tax 6,903 x 14.5 /114.5 = $874.18
Input sales tax 4,500 x 14.5% = $652.50
Balance on sales tax a/c (credit) = 874.18 – 652.50 = 221.68