Sales tax collected should be shown as a liability in the balance sheet and sales tax paid should be debited to the profit and loss account.

Recording Sales Tax in Final Accounts

Sales tax is a tax levied on goods and services, and it is collected by the seller from the buyer at the time of sale. If sales tax collected is given in the trial balance, it needs to be recorded in the final accounts. Here's how:

1. Identify the Sales Tax Account
The first step is to identify the sales tax account in the trial balance. It is usually called "Sales Tax Collected" or "Output Tax."

2. Separate the Sales Tax Amount
Once you have identified the sales tax account, separate the sales tax amount from the sales amount. For example, if the total sales for the period are $10,000, and the sales tax rate is 5%, the sales tax collected would be $500.

3. Record Sales Tax in the Income Statement
The sales tax collected is a revenue for the business, and it needs to be recorded in the income statement. It should be shown as a separate line item under the heading "Sales Revenue" or "Revenue." For example:

Sales Revenue: $10,000
Sales Tax Collected: $500
Total Revenue: $10,500

4. Record Sales Tax in the Balance Sheet
The sales tax collected is a liability for the business, as it needs to be paid to the government. It should be recorded in the balance sheet as a current liability under the heading "Sales Tax Payable." For example:

Current Assets:
Cash: $5,000
Accounts Receivable: $2,000
Total Current Assets: $7,000

Current Liabilities:
Accounts Payable: $3,000
Sales Tax Payable: $500
Total Current Liabilities: $3,500

5. Adjust for Sales Tax Refunds
If the business has issued any sales tax refunds during the period, it needs to be adjusted for in the final accounts. The sales tax refunds should be deducted from the sales tax collected in the income statement and the sales tax payable in the balance sheet.

In conclusion, recording sales tax collected in the final accounts requires identifying the sales tax account, separating the sales tax amount, and recording it in the income statement and balance sheet. It is important to adjust for sales tax refunds if any.