A company receives $176, of which $16 is for sales tax. The journal entry to record the sale would include a
A) debit to Sales Taxes Expense for $16.
B) credit to Sales Taxes Payable for $16.
C) debit to Sales Revenue for $176.
D) debit to Cash for $160.

Question

Quizplus · Accepted Answer

The sales tax collected is a liability until it is paid to the government, so it is credited to Sales Taxes Payable.

A Company Receives $176, of Which $16 Is for Sales