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How is sales tax calculated?

The amount of sales tax to charge a customer is based on the sales tax percentage rate multiplied by the total amount of goods purchased.

For example, if a customer purchased $10 of goods, and the sales tax rate is 10%, then the company would charge the customer $1 ($10 x 10% = $1). That means the company would collect $11 of cash from the customer, but $1 would be categorized as sales tax payable.

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