P10-1A. On January 1, 2015, the ledger of Accardo Company contains the following
ID: 2448123 • Letter: P
Question
P10-1A. On January 1, 2015, the ledger of Accardo Company contains the following liability accounts.
Accounts Payable $52,000
Sales Taxes Payable 7,700
Unearned Service Revenue 16,000
During January, the following selected transactions occurred.
Jan. 5 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes.
12 Performed services for customers who had made advance payments of $10,000. (Credit Service Revenue.)
14 Paid state revenue department for sales taxes collected in December 2014 ($7,700).
20 Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax.
21 Borrowed $27,000 from Girard Bank on a 3-month, 8%, $27,000 note.
25 Sold merchandise for cash totaling $12,420, which includes 8% sales taxes.
Instructions
Journalize the January transactions.
Journalize the adjusting entry at January 31 for the outstanding note payable. (Hint: Use one-third of a month for the Girard Bank note.)
Prepare the current liabilities section of the balance sheet at January 31, 2015. Assume no change in accounts payable.
Explanation / Answer
Ans 1 05-Jan Account head & Details Debit Credit Cash 20,520.00 Sales 19,000.00 Sales Tax Payable 1,520.00 12-Jan Unearned Service Revenue 10,000.00 Service Revenue 10,000.00 14-Jan Sales Tax Payable 7,700.00 Cash 7,700.00 20-Jan Accounts Receivable 48,600.00 Sales 45,000.00 Sales Tax Payable 3,600.00 21-Jan Cash 27,000.00 Short term note payable 27,000.00 25-Jan Cash 12,420.00 Sales 11,500.00 Sales Tax Payable 920.00 Ans 2 Closing Entries 31-Jan Interest Expense 60.00 Interest Payable 60.00 Ans 3 Current Liabilities Accounts Payable 52,000.00 Sales Tax Payable 6,040.00 Short term note payable 27,000.00 Interest Payable on note 60.00 Unearned Service Revenue 6,000.00 Total Current Liabilities 91,100.00