Balance on the sales tax/ VAT account ( video below)

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

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