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Sales tax payments against the liability account. What is the adjusting entry?
The company booked its sales tax payments from the bank account to sales tax liabilities. Now I of course need to credit the liability account, but what account should I debit to fix this?
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When you provide a service or product the journal entry for the sales tax will be:
Debit Cash (if cash received) or Accounts Receivable (if on account) for the amount of sales tax Credit Sales Taxes Payable for the amount of sales tax When you make the sales taxe payment: Debit Sales Taxes Payable for the amount of sales tax paid Credit Cash for the amount of sales tax paid |
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