A company selling merchandise in a state charging 6% sales tax would debit sales tax expense for 6% of gross revenue each time a sale is recorded.

Question

Quizplus · Accepted Answer

The company would debit the Sales Revenue account for the full amount of the sale and credit the Sales Tax Payable account for 6% of the sale. This is because the sales tax is collected on behalf of the state and is not an expense of the company.

A Company Selling Merchandise in a State Charging 6% Sales