Accounting journal entry help?

Question

I'm using Gold Run Simulation for my accounting class and I can't figure out what accounts I should be using, crediting and debiting for this transaction. Can anyone help?

Compled service and installation work on a customer snowmobile and the customer paid cash for the work completed. Sales invoice number G4009 lists $124.00 for two hours of labor, $500.80 for accesories, and 6% sales tax on the total (labor and accessories). Roundaing all sales tax calculations to the nearse cent.

Merchandise listed:

Item: Muffler Pak Quanity: 3 Net Cost: $65.30
Item: Super Duty Quantity: 2 Net Cost $27.25

Each muffer pak is being sold for $130.60 retail actually cost the business 65.30. The super duty shocks cost $27.25 each and are sold for 54.50. ALL accessories cary a 50% "normal" markup on selling price (100% on net cost).

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Anyone know how to entry this in the journal?

Answer 1

To record the sales under inv no. G4009 which the customer paid in cash:
Dr Cash 662.29
Cr Sales 624.80 {124 + 3*130.60 + 2*54.50}
Cr Sales tax 37.49 {624.80 at 6%}

To record the cost of the goods sold:
Dr COGS 250.40 {3*65.30 + 2*27.25}
Cr Inventory 250.40

To double-check the mark-up of the accessories, take the cost of 250.40 at 100% mark-up gives you the selling price of 500.80. Add to that the labour of 124 gives you the total sales invoice value of 624.80.