Lyon co. collected $1,200 in sales tax from customers during the month of march. in

sales tax payable 1,200 debit

cash 1,200 credit

Explanation:

To record this entry we need to understand the sales tax is not an expense for the company as is charged into the invoice and paid by the customers.

The company is an intermediate agent between the customer and the government. The company's role is to collects the tax and pay to the government. We need to record the payment of 1,200 to the government thus, we write-off the sales tax payable and credit the cash give away to the IRS