Cima C02 Exam Question No 15

Question No 15:

North, which is registered for sales tax, received an invoice from an advertising agency for $4,000 plus sales tax. The rate of sales tax on the goods was 20%. What would the correct ledger entries be?

Debit $             Credit $
A. Advertising expense 4,000 Payable 4,000
B. Advertising expense 4,800 Payable 4,800
C. Advertising expense 4,800 Payable 4,000 Sales tax account 800
D. Advertising expense 4,000 Payable 4,800 Sales tax account 800

Answer: D