What account is credited by the seller when tax is collected on retail sales?
The answer is the Sales Tax Payable.
What type of account is sales tax payable?
Sales taxes payable is a liability account in which is stored the aggregate amount of sales taxes that a business has collected from customers on behalf of a governing tax authority. The business is the custodian of these funds, and is liable for remitting them to the government on a timely basis.
What account is collected sales tax held in QuickBooks?
expense account
How are sales taxes collected?
Use tax is typically collected by the retailer at the time of sale, but it is imposed on items for use in California but purchased outside of the state. Sales and use taxes are collected on the retail sale or use of tangible personal property within the State of California.
How do I keep track of sales tax collected?
After you have collected the sales taxes, you must keep records of how much you have collected. These amounts go into the “Sales Tax Payable” liability account, in your accounting system. If you have an online accounting system, you can set up sales transactions to automatically post to this account.
Who is liable for excise tax?
The general rule is that the producer of a product is the one liable for the excise tax. However, if the tax is unpaid and possession is transferred to the buyer, the buyer/possessor of the product can be made liable for the excise tax.
What is an example of an excise tax?
Excise taxes are most often levied upon cigarettes, alcohol, gasoline and gambling. These are often considered superfluous or unnecessary goods and services. To raise taxes on them is to raise their price and to reduce the amount they are used. In this context, excise taxes are sometimes known as “sin taxes.”
What is the purpose of an excise tax?
Excise duties usually have one or two purposes: to raise revenue and to discourage particular behavior or purchase of particular items. Taxes such as those on sales of fuel, alcohol and tobacco are often “justified” on both grounds.
What is meant by excise tax?
Excise taxes are taxes that are imposed on various goods, services and activities. Such taxes may be imposed on the manufacturer, retailer or consumer, depending on the specific tax.
What states have no excise tax?
Most states have sales tax to help generate revenue for its operations – but five states currently have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
Where do excise taxes go?
Excise tax revenue is either transferred to the general fund or allocated to trust funds dedicated to specified purposes. General fund excise taxes account for roughly 40 percent of total excise receipts, with the remaining 60 percent going to trust funds.
How do you calculate federal excise tax?
If a customer buys 20 gallons of gasoline at your business, multiply 20 gallons by 50.6 cents to get the state excise tax amount of $10.12. Calculate the federal excise tax by multiplying 20 gallons times 18.4 cents per gallon to get $3.68.
How does excise tax affect supply and demand?
The effect of the tax is to shift the supply curve, which is S without the tax, to St. The shift is an upward shift by the amount of the tax, but the upward shift is the same as a backward shift, a decrease in supply. Thus the consumers and producers share the burden of the tax.
How would a new excise tax affect the supply curve?
How does a supply curve illustrate the law of supply? How would a new excise tax affect the supply curve? It would not change the supply curve because it would only move the price. What happens to a producer is the supply of a good is elastic?
Do you add tax to supply or demand?
The effect of the tax on the supply-demand equilibrium is to shift the quantity toward a point where the before-tax demand minus the before-tax supply is the amount of the tax. A tax increases the price a buyer pays by less than the tax. Similarly, the price the seller obtains falls, but by less than the tax.
How do you find the new quantity after tax?
Rewrite the demand and supply equation as P = 20 – Q and P = Q/3. With $4 tax on producers, the supply curve after tax is P = Q/3 + 4. Hence, the new equilibrium quantity after tax can be found from equating P = Q/3 + 4 and P = 20 – Q, so Q/3 + 4 = 20 – Q, which gives QT = 12.