Debit Cash $5940 ; Credit Sale $5500 ; credit Sales Taxes Payable $440.
Debit your Cash account and credit your Sales Revenue and Sales Tax Payable accounts to record the sales tax that you have received from clients. You can go back and undo your first journal entry once the sales tax has been paid to the government. To achieve this, debit your Sales Tax Payable account and credit your Cash account.
The entry for a cash sale is [debit] Cash. Since the customer pays cash at the moment of sale, cash is increased.
In a cash sale, the buyer pays for the goods or services right away. Payment is made right away in a cash transaction. It doesn't matter how the customer pays, as long as money is transferred. Cash is one possibility.
Therefore, the journal entry to record the cash sales is Debit Cash $5940 ; Credit Sale $5500 ; credit Sales Taxes Payable $440.
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