WGU D104
Intermediate Accounting II
OA2 (Units 4-6)
Actual Questions with Verified Answers
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What You Will Get:
➢60 OA Exam Questions w/ Answers
➢Complete Units 4, 5, and 6
➢Accounting Rule Included
Take and pass the OA :)
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,1. A company owns a machine that it purchased on January 1, year 1 for $600,000. The
machine has an estimated useful life of 5 years and an estimated salvage value of
$75,000. The company uses the sum-of-the-years'-digits method. What is the
depreciation expense for each year and book value of the machine at the end of year 5?
Year 1: ($600,000 - $75,000) x 5/15 = $175,000 Year 2: ($600,000 - $75,000) x 4/15 =
$140,000 Year 3: ($600,000 - $75,000) x 3/15 = $105,000 Year 4
Correct Answer:
$(600,000 - $75,000) x 2/15 = $70,000 Year 5: ($600,000 - $75,000) x 1/15 = $35,000
Total accumulated depreciation $525,000 = ($175,000 + $140,000 + $105,000+
$70,000 + $35,000) Book value of the machine at the end of year 5 is its salvage
$75,000 = $600,000 - $525,000
Accounting Rule: the sum-of-the-years'-digits method is an accelerated depreciation
method resulting in higher deprecation cost in the earlier years and lower charges in
later periods. It is a passage of time depreciation method that results in a decreasing
depreciation charge based on a decreasing fraction of depreciable cost (original cost
less salvage value). Each fraction uses the sum of the years as a denominator (e.g. 5 +
4 + 3 + 2 + 1 = 15). The numerator is the number of years of estimated life remaining
as of the beginning of the year. In this method, the numerator decreases year by year,
and the denominator remains constant (e.g. 5/15, 4/15, 3/15, 2/15, and 1/15). At the
end of the asset's useful life, the balance remaining should equal the salvage value.
Never depreciate beyond an asset's salvage value.
2. A company purchased a truck at the beginning of 2020 for $109,200. The truck is
estimated to have a salvage value of $4,200 and a useful life of 120,000 miles. It was
driven 21,000 miles in 2020 and 29,000 miles in 2021. What is the depreciation expense
for 2020 and 2021 using the variable charge method? Year 2020: $18,375 Year 2021
Correct Answer:
$25,375 Formula: ( (Cost - Salvage Value) × Current Miles)/ Total Estimated Miles
, Year 2020: (($109,200 - $4,200) × 21,000)/ 120,000 = $18,375 Year 2021: (($109,200 -
$4,200) × 29,000)/ 120,000 = $25,375
Accounting Rule: The activity method (also called the variable-charge or units-of-
activity/production approach) assumes that depreciation is a function of use or
productivity, instead of the passage of time. It calculates depreciation based on the
asset's activity such as the number of units produced or the number of hours/miles
the asset is used during the period. In other words, this method focuses on the actual
use of the asset rather than the passage of time. The amount of depreciation expense
is directly proportional to the amount of the asset's usage. The activity rate is
multiplied by the depreciable cost (original cost less salvage value). Another formula
is: (Actual Activity in Period/Total Estimate Activity) x (Cost - Salvage Value)
3. Equipment with a cost of $450,000 has an estimated salvage value of $30,000 and an
estimated life of 4 years or 10,000 hours. It is to be depreciated by the units-of-activity
method. What is the amount of depreciation for the first full year, during which the
equipment was used 2,700 hours?
Correct Answer:
$113,400 $113,400 = (2,,000) x ($450,000 - $30,000)
Accounting Rule: (Actual Activity in Period/Total Estimate Activity) x (Cost - Salvage
Value)
4. A company placed an asset into service on day 1 of year 1 with the following data
related to the purchase: Cost of machinery $225,000 Estimated salvage value $75,000
Useful life 5 years What amount of annual depreciation expense should be recorded in
the first and second years using double-declining balance method, and what is the
machine's book value for each of the years? Year 1: $90,000 depreciation expense
$135,000 book value Year 2
Correct Answer:
$54,000 depreciation expense $81,000 book value
Accounting Rule: the double-declining balance (DDB) method is an accelerated
depreciation that records larger depreciation expenses during the earlier years of an
asset's useful life, and smaller ones in later years. First, divide 100% by the number of
, years in the asset's useful life, this is the straight-line depreciation rate. Then, multiply
that number by 2 and that is the double-declining depreciation rate. Multiply that rate
by the asset's book value in each year. Depreciation continues until the asset's value
declines to its salvage value.
5. The activity method of depreciation:
• a. Is a variable charge approach.
• b. Assumes that depreciation is a function of the passage of time.
• c. Conceptually associates cost in terms of input measures.
• d. All of these answers are correct.
Correct Answer:
a. Is a variable charge approach.
Accounting Rule: under the activity method, the amount of depreciation expense is
directly proportional to the amount of the asset's usage.
6. Depreciation is a variable expense if the depreciation method used is:
• a. units-of-production.
• b. straight-line.
• c. sum-of-the-years'-digits.
• d. declining-balance.
Correct Answer:
a. units-of-production.
Accounting Rule: the activity method is also called the variable-charge or units-of-
production approach.
7. In the first year of an asset's life, which of the following methods, in addition to
straight line, has the smallest depreciation?
• a.MACRS.
• b. declining balance.
• c. sum-of-the-years' digits.
• d. composite or group.
, Correct Answer:
d. composite or group. Composite or group depreciation calculates annual
depreciation using the straight line method.
8. On July 1, 2020, a company purchased a machine with a five-year useful life for
$10,000 and no salvage value. The company prepares accrual-basis financial statements
on a calendar-year basis. How many months should be included in the calculation of
depreciation expense for the year of acquisition using the double-declining-balance
method?
Correct Answer:
Six
9. A company has a policy of calculating depreciation using the nearest fraction of a year
policy. On May 10, the company purchased and placed in service an asset costing
$50,000 with a five-year useful life. The Company uses the straight-line depreciation
method. What fraction is used to calculate the depreciation expense on December 31
and what is the depreciation expense on December 31? (round your ans wer to a whole
number)
Correct Answer:
$6,392 $6,392 = (7.67/12) x ($50,000/5)
Accounting Rule: the nearest fraction of a year policy states that the depreciation
expense is prorated at the time the asset is placed in service You need to kno w the
various fractional-year policies (shown in the attached image)
10. A company purchases an asset on April 5 of the current year. The company would
like to use the depreciation policy that will result in the highest depreciation expense in
the last year of the asset's useful life. Which depreciation policy should be used?
• a. nearest full month.
• b. half-year convention.
• c. nearest fraction of the year.
• d. full year in period of disposal.
, Correct Answer:
d. full year in period of disposal. You need to know the various fractional-year policies
(shown in the attached image.)
11. When depreciation is computed for partial periods under a decreasing charge
depreciation method, it is necessary to:
• a. charge a full year's depreciation to the year of acquisition.
• b. determine depreciation expense for the full year and then prorate the
expense between the two periods involved.
• c. use the straight-line method for the year in which the asset is sold or
otherwise disposed of.
• d. use a salvage value equal to the first year's partial depreciation charge.
Correct Answer:
b. determine depreciation expense for the full year and then prorate the expense
between the two periods involved.
Accounting Rule: in computing depreciation expense for partial periods, first
determine the depreciation expense for the full year and then prorate this amount
between the two periods involved.
12. A lumber retailer recently purchased $500,000 of lumber from a local lumber mill
with terms 2/10, n/30. How should this transaction be reported on the balance sheet?
• a. returnable cash deposits.
• b. notes payable.
• c. accounts payable.
• d. unearned revenue.
Correct Answer:
c. accounts payable.
Accounting Rule: balances owed to others for goods, supplies, or services purchased
on account are accounts payable or trade accounts payable.
,13. Which of the following is not a current liability?
• a. cash dividends declared.
• b. deposits received from customers.
• c. deferred revenue.
• d. preferred dividends in arrears.
Correct Answer:
d. preferred dividends in arrears.
Accounting Rule: accumulated but undeclared dividends on cumulative preferred
stock is not a currently liability. In addition, dividends payable in the form of additional
shares of stock (stock dividend) are not recognized as a current liability.
14. On March 1, 2020, a company borrows money from its bank. The company signs a
$100,000, 6%, four-month note. The company has a calendar year end and prepares
financial statements annually. 1) What is the journal entry to record issuance of the
note? 2) What is the journal entry to record payment of the note at maturity?
Correct Answer:
1) debit cash 100,000 credit notes payable 100,000 2) debit notes payable 100,000
debit interest expense 2,000* credit cash 102,000 For question 2, the interest expense
equals. ($100,000 x 6%) x 4/12 Interest is calculated on an annual basis.
15. On March 1, 2020, a company borrows money from its bank. The company signs a
$102,000, zero-interest-bearing, four-month note. The present value of the note is
$100,000. The company has a calendar year end and prepares financial statements
annually. What is the journal entry the company records for issuance of the note?
Correct Answer:
debit cash 100,000 debit discount on notes payable 2,000 credit notes payable
102,000
Accounting Rule: a zero-interest-bearing note does not explicitly state an interest rate
on the face of the note. However, interest is still charged. At maturity, the borrower
must pay back an amount greater than the cash received at the issuance date. In other
words, the borrower receives in cash the present value of the note. The present value
equals the face value of the note at maturity minus the interest or discount charged
, by the lender for the term of the note. The bank takes its fee "up front" rather than on
the date the note matures. The note is always credited for is face value at the time of
issuance which is more than the cash received. The discount on notes payable is the
difference between the cash received and the face value of the note. It represents the
cost of borrowing and represents interest expense that will be charged to future
periods. The discount on notes payable is a contra account to notes payable and is
subtracted from notes payable on the balance sheet. The journal entry to amortize the
discount would be: Debit interest expense Credit discount on notes payable
16. A magazine outlet sells 64,000, 12-month subscriptions on account on March 1st.
The subscription price is $15 each. The subscriptions start on April 1st. What is the
journal entry on March 1st?
• a. debit unearned subscription revenue for $960,000.
• b. debit prepaid subscriptions for $960,000.
• c. credit cash for $960,000.
• d. credit unearned subscription revenue for $960,000.
Correct Answer:
d. credit unearned subscription revenue for $960,000. ($960,000= $15 x 64,000
subscriptions)
17. A tenant rented office space on September 1st at $450 per month, paying six
months' rent in advance. The landlord recognized a current liability of $2,700 at that
time. The December 31st, year-end adjusting journal entry is:
• a. debit unearned rent for $1,800; credit rent revenue for $1,800.
• b. debit unearned rent for $1,350; credit rent revenue for $1,350.
• c. debit rent revenue for $900; credit unearned rent for $900.
• d. debit cash for $2,700; credit rent revenue for $1,800; credit unearned rent
for $900.
Correct Answer:
a. debit unearned rent for $1,800; credit rent revenue for $1,800. The $2,700 was
recorded as unearned rent (a current liability). At December 31, 2/3 of the rent will
, have been earned (September 1 to December 31). The amount of rent revenue to be
recognized is 2/3 of $2,700 or $1,800.
18. A retail store operates in a state with a 7% sales tax. The retailer records the sales tax
in the sales revenue account. The amount recorded in the sales revenue account during
May was $754,350. What is the amount of sales taxes for May?
Correct Answer:
$49,350 $49,350 = $754,350 - ($754,.07)
19. A company made cash sales during the month of October of $375,000. The sales are
subject to a 6% sales tax that was also collected. Which of the following would be
included in the journal entry to reflect the sale transactions?
• a. debit accounts receivable for $375,000.
• b. credit sales taxes payable for $21,226.
• c. credit sales revenue for $347,483.
• d. credit sales taxes payable for $22,500.
Correct Answer:
d. credit sales taxes payable for $22,500. $375,000 x 6%
20. A company does not segregate sales tax and the amount of sale at the time of sale.
At quarter end, the company must record the sales tax. The sales revenue account
shows a balance of $200,000, which includes 6% sales tax. Which journal entry should be
used to record the amount due to the taxing unit?
• a. debit sales tax expense for $11,321; credit sales taxes payable for $11,321.
• b. debit sales revenue for $11,321; credit sales taxes payable for $11,321.
• c. debit sales revenue for $12,000; credit sales taxes payable for $12,000.
• d. debit sales tax expense for $12,000; credit sales taxes payable for $12,000.-
Correct Answer:
b. debit sales revenue for $11,321; credit sales taxes payable for $11,321. The sales
revenue account balance without the sales tax is $188,679 = $200,.06. Subtract
this amount from the $200,000 for the sales tax amount.
Intermediate Accounting II
OA2 (Units 4-6)
Actual Questions with Verified Answers
Pass the Exam with Confidence
What You Will Get:
➢60 OA Exam Questions w/ Answers
➢Complete Units 4, 5, and 6
➢Accounting Rule Included
Take and pass the OA :)
,PREVIEW PAGES BELOW
Get the Complete PDF
After Purchase
"If you require further clarification or in need of
any study resources, feel free to Message me."
,1. A company owns a machine that it purchased on January 1, year 1 for $600,000. The
machine has an estimated useful life of 5 years and an estimated salvage value of
$75,000. The company uses the sum-of-the-years'-digits method. What is the
depreciation expense for each year and book value of the machine at the end of year 5?
Year 1: ($600,000 - $75,000) x 5/15 = $175,000 Year 2: ($600,000 - $75,000) x 4/15 =
$140,000 Year 3: ($600,000 - $75,000) x 3/15 = $105,000 Year 4
Correct Answer:
$(600,000 - $75,000) x 2/15 = $70,000 Year 5: ($600,000 - $75,000) x 1/15 = $35,000
Total accumulated depreciation $525,000 = ($175,000 + $140,000 + $105,000+
$70,000 + $35,000) Book value of the machine at the end of year 5 is its salvage
$75,000 = $600,000 - $525,000
Accounting Rule: the sum-of-the-years'-digits method is an accelerated depreciation
method resulting in higher deprecation cost in the earlier years and lower charges in
later periods. It is a passage of time depreciation method that results in a decreasing
depreciation charge based on a decreasing fraction of depreciable cost (original cost
less salvage value). Each fraction uses the sum of the years as a denominator (e.g. 5 +
4 + 3 + 2 + 1 = 15). The numerator is the number of years of estimated life remaining
as of the beginning of the year. In this method, the numerator decreases year by year,
and the denominator remains constant (e.g. 5/15, 4/15, 3/15, 2/15, and 1/15). At the
end of the asset's useful life, the balance remaining should equal the salvage value.
Never depreciate beyond an asset's salvage value.
2. A company purchased a truck at the beginning of 2020 for $109,200. The truck is
estimated to have a salvage value of $4,200 and a useful life of 120,000 miles. It was
driven 21,000 miles in 2020 and 29,000 miles in 2021. What is the depreciation expense
for 2020 and 2021 using the variable charge method? Year 2020: $18,375 Year 2021
Correct Answer:
$25,375 Formula: ( (Cost - Salvage Value) × Current Miles)/ Total Estimated Miles
, Year 2020: (($109,200 - $4,200) × 21,000)/ 120,000 = $18,375 Year 2021: (($109,200 -
$4,200) × 29,000)/ 120,000 = $25,375
Accounting Rule: The activity method (also called the variable-charge or units-of-
activity/production approach) assumes that depreciation is a function of use or
productivity, instead of the passage of time. It calculates depreciation based on the
asset's activity such as the number of units produced or the number of hours/miles
the asset is used during the period. In other words, this method focuses on the actual
use of the asset rather than the passage of time. The amount of depreciation expense
is directly proportional to the amount of the asset's usage. The activity rate is
multiplied by the depreciable cost (original cost less salvage value). Another formula
is: (Actual Activity in Period/Total Estimate Activity) x (Cost - Salvage Value)
3. Equipment with a cost of $450,000 has an estimated salvage value of $30,000 and an
estimated life of 4 years or 10,000 hours. It is to be depreciated by the units-of-activity
method. What is the amount of depreciation for the first full year, during which the
equipment was used 2,700 hours?
Correct Answer:
$113,400 $113,400 = (2,,000) x ($450,000 - $30,000)
Accounting Rule: (Actual Activity in Period/Total Estimate Activity) x (Cost - Salvage
Value)
4. A company placed an asset into service on day 1 of year 1 with the following data
related to the purchase: Cost of machinery $225,000 Estimated salvage value $75,000
Useful life 5 years What amount of annual depreciation expense should be recorded in
the first and second years using double-declining balance method, and what is the
machine's book value for each of the years? Year 1: $90,000 depreciation expense
$135,000 book value Year 2
Correct Answer:
$54,000 depreciation expense $81,000 book value
Accounting Rule: the double-declining balance (DDB) method is an accelerated
depreciation that records larger depreciation expenses during the earlier years of an
asset's useful life, and smaller ones in later years. First, divide 100% by the number of
, years in the asset's useful life, this is the straight-line depreciation rate. Then, multiply
that number by 2 and that is the double-declining depreciation rate. Multiply that rate
by the asset's book value in each year. Depreciation continues until the asset's value
declines to its salvage value.
5. The activity method of depreciation:
• a. Is a variable charge approach.
• b. Assumes that depreciation is a function of the passage of time.
• c. Conceptually associates cost in terms of input measures.
• d. All of these answers are correct.
Correct Answer:
a. Is a variable charge approach.
Accounting Rule: under the activity method, the amount of depreciation expense is
directly proportional to the amount of the asset's usage.
6. Depreciation is a variable expense if the depreciation method used is:
• a. units-of-production.
• b. straight-line.
• c. sum-of-the-years'-digits.
• d. declining-balance.
Correct Answer:
a. units-of-production.
Accounting Rule: the activity method is also called the variable-charge or units-of-
production approach.
7. In the first year of an asset's life, which of the following methods, in addition to
straight line, has the smallest depreciation?
• a.MACRS.
• b. declining balance.
• c. sum-of-the-years' digits.
• d. composite or group.
, Correct Answer:
d. composite or group. Composite or group depreciation calculates annual
depreciation using the straight line method.
8. On July 1, 2020, a company purchased a machine with a five-year useful life for
$10,000 and no salvage value. The company prepares accrual-basis financial statements
on a calendar-year basis. How many months should be included in the calculation of
depreciation expense for the year of acquisition using the double-declining-balance
method?
Correct Answer:
Six
9. A company has a policy of calculating depreciation using the nearest fraction of a year
policy. On May 10, the company purchased and placed in service an asset costing
$50,000 with a five-year useful life. The Company uses the straight-line depreciation
method. What fraction is used to calculate the depreciation expense on December 31
and what is the depreciation expense on December 31? (round your ans wer to a whole
number)
Correct Answer:
$6,392 $6,392 = (7.67/12) x ($50,000/5)
Accounting Rule: the nearest fraction of a year policy states that the depreciation
expense is prorated at the time the asset is placed in service You need to kno w the
various fractional-year policies (shown in the attached image)
10. A company purchases an asset on April 5 of the current year. The company would
like to use the depreciation policy that will result in the highest depreciation expense in
the last year of the asset's useful life. Which depreciation policy should be used?
• a. nearest full month.
• b. half-year convention.
• c. nearest fraction of the year.
• d. full year in period of disposal.
, Correct Answer:
d. full year in period of disposal. You need to know the various fractional-year policies
(shown in the attached image.)
11. When depreciation is computed for partial periods under a decreasing charge
depreciation method, it is necessary to:
• a. charge a full year's depreciation to the year of acquisition.
• b. determine depreciation expense for the full year and then prorate the
expense between the two periods involved.
• c. use the straight-line method for the year in which the asset is sold or
otherwise disposed of.
• d. use a salvage value equal to the first year's partial depreciation charge.
Correct Answer:
b. determine depreciation expense for the full year and then prorate the expense
between the two periods involved.
Accounting Rule: in computing depreciation expense for partial periods, first
determine the depreciation expense for the full year and then prorate this amount
between the two periods involved.
12. A lumber retailer recently purchased $500,000 of lumber from a local lumber mill
with terms 2/10, n/30. How should this transaction be reported on the balance sheet?
• a. returnable cash deposits.
• b. notes payable.
• c. accounts payable.
• d. unearned revenue.
Correct Answer:
c. accounts payable.
Accounting Rule: balances owed to others for goods, supplies, or services purchased
on account are accounts payable or trade accounts payable.
,13. Which of the following is not a current liability?
• a. cash dividends declared.
• b. deposits received from customers.
• c. deferred revenue.
• d. preferred dividends in arrears.
Correct Answer:
d. preferred dividends in arrears.
Accounting Rule: accumulated but undeclared dividends on cumulative preferred
stock is not a currently liability. In addition, dividends payable in the form of additional
shares of stock (stock dividend) are not recognized as a current liability.
14. On March 1, 2020, a company borrows money from its bank. The company signs a
$100,000, 6%, four-month note. The company has a calendar year end and prepares
financial statements annually. 1) What is the journal entry to record issuance of the
note? 2) What is the journal entry to record payment of the note at maturity?
Correct Answer:
1) debit cash 100,000 credit notes payable 100,000 2) debit notes payable 100,000
debit interest expense 2,000* credit cash 102,000 For question 2, the interest expense
equals. ($100,000 x 6%) x 4/12 Interest is calculated on an annual basis.
15. On March 1, 2020, a company borrows money from its bank. The company signs a
$102,000, zero-interest-bearing, four-month note. The present value of the note is
$100,000. The company has a calendar year end and prepares financial statements
annually. What is the journal entry the company records for issuance of the note?
Correct Answer:
debit cash 100,000 debit discount on notes payable 2,000 credit notes payable
102,000
Accounting Rule: a zero-interest-bearing note does not explicitly state an interest rate
on the face of the note. However, interest is still charged. At maturity, the borrower
must pay back an amount greater than the cash received at the issuance date. In other
words, the borrower receives in cash the present value of the note. The present value
equals the face value of the note at maturity minus the interest or discount charged
, by the lender for the term of the note. The bank takes its fee "up front" rather than on
the date the note matures. The note is always credited for is face value at the time of
issuance which is more than the cash received. The discount on notes payable is the
difference between the cash received and the face value of the note. It represents the
cost of borrowing and represents interest expense that will be charged to future
periods. The discount on notes payable is a contra account to notes payable and is
subtracted from notes payable on the balance sheet. The journal entry to amortize the
discount would be: Debit interest expense Credit discount on notes payable
16. A magazine outlet sells 64,000, 12-month subscriptions on account on March 1st.
The subscription price is $15 each. The subscriptions start on April 1st. What is the
journal entry on March 1st?
• a. debit unearned subscription revenue for $960,000.
• b. debit prepaid subscriptions for $960,000.
• c. credit cash for $960,000.
• d. credit unearned subscription revenue for $960,000.
Correct Answer:
d. credit unearned subscription revenue for $960,000. ($960,000= $15 x 64,000
subscriptions)
17. A tenant rented office space on September 1st at $450 per month, paying six
months' rent in advance. The landlord recognized a current liability of $2,700 at that
time. The December 31st, year-end adjusting journal entry is:
• a. debit unearned rent for $1,800; credit rent revenue for $1,800.
• b. debit unearned rent for $1,350; credit rent revenue for $1,350.
• c. debit rent revenue for $900; credit unearned rent for $900.
• d. debit cash for $2,700; credit rent revenue for $1,800; credit unearned rent
for $900.
Correct Answer:
a. debit unearned rent for $1,800; credit rent revenue for $1,800. The $2,700 was
recorded as unearned rent (a current liability). At December 31, 2/3 of the rent will
, have been earned (September 1 to December 31). The amount of rent revenue to be
recognized is 2/3 of $2,700 or $1,800.
18. A retail store operates in a state with a 7% sales tax. The retailer records the sales tax
in the sales revenue account. The amount recorded in the sales revenue account during
May was $754,350. What is the amount of sales taxes for May?
Correct Answer:
$49,350 $49,350 = $754,350 - ($754,.07)
19. A company made cash sales during the month of October of $375,000. The sales are
subject to a 6% sales tax that was also collected. Which of the following would be
included in the journal entry to reflect the sale transactions?
• a. debit accounts receivable for $375,000.
• b. credit sales taxes payable for $21,226.
• c. credit sales revenue for $347,483.
• d. credit sales taxes payable for $22,500.
Correct Answer:
d. credit sales taxes payable for $22,500. $375,000 x 6%
20. A company does not segregate sales tax and the amount of sale at the time of sale.
At quarter end, the company must record the sales tax. The sales revenue account
shows a balance of $200,000, which includes 6% sales tax. Which journal entry should be
used to record the amount due to the taxing unit?
• a. debit sales tax expense for $11,321; credit sales taxes payable for $11,321.
• b. debit sales revenue for $11,321; credit sales taxes payable for $11,321.
• c. debit sales revenue for $12,000; credit sales taxes payable for $12,000.
• d. debit sales tax expense for $12,000; credit sales taxes payable for $12,000.-
Correct Answer:
b. debit sales revenue for $11,321; credit sales taxes payable for $11,321. The sales
revenue account balance without the sales tax is $188,679 = $200,.06. Subtract
this amount from the $200,000 for the sales tax amount.
