What is the correct journal entry for a customer purchase including tax?

In a situation where a customer makes a purchase including sales tax, the correct journal entry reflects the need to capture the total cash received from the customer, the revenue earned from the sale, and the obligation to pay the sales tax to the government.

When recording this transaction, the entry begins with a debit to Cash, reflecting the total amount received. Following this, Revenue is credited, signifying the income earned from the sale of goods or services. Lastly, Sales Tax Payable is credited, which indicates the liability the company has to remit the sales tax collected to the tax authority.

This structure appropriately separates the components of the transaction, ensuring that both the revenue generated and the tax collected are clearly accounted for in the business's financial records. By confirming the receipt of cash, recognizing the revenue, and acknowledging the liability for sales tax, the journal entry accurately reflects the economic reality of the transaction.

Thus, this answer is correct as it accurately captures the entire nature of the transaction, adhering to the principles of double-entry accounting, where each transaction is reflected in at least two accounts to maintain balance.