Problem 13-2 Listed below are selected transactions of Schultz Department Store
ID: 2450892 • Letter: P
Question
Problem 13-2 Listed below are selected transactions of Schultz Department Store for the current year ending December 31. 1. On December 5, the store received $860 from the Selig Players as a deposit to be returned after certain furniture to be used in stage production was returned on January 15. 2. During December, cash sales totaled $836,325, which includes the 5% sales tax that must be remitted to the state by the fifteenth day of the following month 3. On December 10, the store purchased for cash three delivery trucks for $125,400. The trucks were purchased in a state that applies a 5% sales tax. 4. The store determined it will cost $120,000 to restore the area (considered a land improvement) surrounding one of ts store parking lots, when the store is closed in 2 years. Schultz estimates the fair value of the obligation at December 31 is $86,820. Prepare all the journal entries necessary to record the transactions noted above as they occurred and any adjusting journal entries relative to the transactions that would be required to present fair financial statements at December 31. Date each entry. For simplicity, assume that adjusting entries are recorded only once a year on December 31. (If no titles are automatically indented when amount is entered. Do not indent manually.)Explanation / Answer
Journal Entries:
Dec 5 1. Bank A/c Dr. 860
To Seling Players A/c Cr. 860
{ Being refundable deposit received }
Dec 1-31 2. Bank A/c Dr. 836325
To Sales A/c Cr. 796,500
To Sales Tax Payable A/c Cr. 39,825
{ Being cash sales made }
Dec-10. 3. Truck A/c Dr. 119,429
Input salesTax A/c. Dr 5,971
To bank A/c Cr. 125400
{ Being 3 Trucks purchase paying sales tax }
Dec-31 4. No entry, being not a financial transaction or event for the current period.
Dec 31 Sales Tax payable A/c Dr. 39825
To Input Sales Tax A/c Cr. 5,971
To Bank A/c Cr. 33,854
{ Being Adjustment entry passed and net Sales tax remitted to State government }