This is a classic issue with calculations using percents. The very first thing to work out and be very clear on is "PERCENT OF WHAT?"
The results that apmuthu is getting are because he is using the percent values that apply to the $100 base amount to calculate a result from the TOTAL amount. In short: if the journal entries are calculated on the total amount, he needs to adjust the percentages to apply to the total amount of $108.25.
Here's how it's done:
We know that we expect $3.50 in sales tax from every $108.25 invoiced. Therefore...
Sales Tax: $3.50/$108.25 = 3.0023% THIS IS THE PERCENT TO APPLY TO THE TOTAL TO GET 3.5% of the base.
3.5% of $100 = 3.0023% of $108.25
Similarly...
Service Charge: $5.00/$108.25 = 4.6189%
So that $108.25 * 4.6189% = $5.00
You can see that this is nothing more than a simple algebra problem where the equation is $100 * 5% = $108.25 * X
Solving for X gives:
X = ($100 * 5%) / $108.25
X = $5/$108.25
X = .041689 [4.17%]
Never underestimate the importance of good math skills. If you need a refresher or rehabilitation, do as many lessons at KhanAcademy.org as you can or need to.
Good Revenue to You!
-Leland