What is the correct entry for recording sales tax of $1,350,000 and $60,000 of sales tax received in January 2017?

The correct journal entry involves recognizing the total sales tax revenue as well as the amount due to the state government. When the sales tax of $1,350,000 is collected, it needs to be recorded under cash, signifying that cash has increased by that amount. The entry also requires recording the sales tax received from customers, which is the amount that is owed to the state government ($60,000).

In this entry, the cash account is debited because it reflects an increase in assets as cash is received. The account "Due from State Gov" is also debited, which indicates an asset representing the receivable amount that has to be paid to the state for the sales tax collected. The total of these two amounts ($1,350,000 in cash and $60,000 due from the state) leads to a credit to the Revenues Control account, totaling $1,410,000, which reflects the income generated from the sales tax.

The revenue recognition aligns with governmental accounting principles where the total amount of revenue generated from sales taxes must be recognized in the period it was collected. Therefore, this journal entry accurately reflects the financial position and adheres to the rules of revenue recognition in governmental accounting.