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What is the journal entry for a consumer to record sales tax?

As a consumer or buyer, you will likely be charged a sales tax on your purchase (note that some items are exempt from sales tax). For example, if you bought a glass of wine, part of your cash cost would be for the wine and part would be for sales tax. The sales tax should be recorded as a separate expense in the financial statements.

The visual below is a reminder that only a buyer would record sales tax expense. If you are a seller of good or services, you would not record any sales tax expense for the sale of those goods or services. Sales tax is a pass through cost for a seller.


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