What is the correct entry for the collection of current taxes totaling $2,700,000?

The correct entry for the collection of current taxes totaling $2,700,000 is to debit Cash and credit Taxes Receivable. This reflects the actual cash inflow to the government and the reduction in the amount owed by taxpayers.

When taxes are collected, the Cash account is increased (debited) to show that cash has come into the government's coffers. Simultaneously, the Taxes Receivable account is decreased (credited) because the government is now collecting money that previously represented an amount owed to it by taxpayers for taxes assessed.

This aligns with the principles of governmental accounting, where collecting taxes results in an influx of cash and a corresponding decrease in receivables, demonstrating the shift from expected revenue to actual revenue. The entry ensures that both the financial position (through Cash) and the revenues due (through Taxes Receivable) accurately reflect the financial activity that has occurred.