Question

Hudson Hotel collects 15% in city sales taxes on room rentals, in addition to a $2 per room, per night, occupancy tax. Sales taxes for each month are due at the end of the following month, and occupancy taxes are due 15 days after the end of each calendar quarter. On January 3, Year 5, Hudson paid its November Year 4 sales taxes and its fourth quarter Year 4 occupancy taxes. Additional information pertaining to Hudson’s operations is Year 4 Room Rentals Room Nights October $100,000 1,100 November 110,000 1,200 December 150,000 1,800 What amounts should Hudson report as sales taxes payable and occupancy taxes payable in its December 31, Year 4, balance sheet?

Answer 1

Answer:  The correct answer is $54,000 and $8,200

Explanation:

First, we have to calculate the taxes (the tax rate is 15%)

October :      $100,000*( 15/100)=    $15,000

November:    $110,000* ( 15/100) =  $16,500

December :   $150,000 *(15/100) =  $22,500

Total SalesTaxes                              $54,000

Second, we calculate occupancy taxes (2$ per night)

October:       (number of nights)  1100*$ 2  =    $2,200

November:    (number of nights)  1200*$ 2  =  $2,400

December:    (number of nights)  1800*$ 2  =  $3,600

Total Occupancy taxes                                     $8200