On January 1,2014, the ledger of Hiatt Company contained these liability account
ID: 2478162 • Letter: O
Question
On January 1,2014, the ledger of Hiatt Company contained these liability accounts. Accounts Payable $42,500 Sales Taxes Payable 6,600 Unearned Service Revenue 19,000 During January, the following selected transactions occurred. Jan. 1 Borrowed $18,000 in cash from Premier Bank on a 4-month, 5%, $18,000 note. 5 Sold merchandise for cash totaling $6,254, which includes 6% sales taxes. 12 Performed services for customers who had made advance payments of $10,000. (Credit Service Revenue.) 14 Paid state treasurer's department for sales taxes collected in December 2013, $6,600. Sold 500 units of a new product on credit at $48 per unit, plus 6% sales tax. During January, the company's employees earned wages of $70,000. Withholdings related to these wages were $5, 355 for Social Security (FICA), $5,000 for federal income tax, and $1,500 for state income tax. The company owed no money related to these earnings for federal or state unemployment tax. Assume that wages earned during January will be paid during February. No entry had been recorded for wages or payroll tax expense as of January 31. Journalize the adjusting entries at January 31 the outstanding note payable and for salaries and wages expense and payroll tax expense. (credit account titles are automatically indented amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit (To record the interest on outstanding notes payable.) (To record payroll and withholding taxes.) (To record employer's payroll taxes.)Explanation / Answer
Date
Particulars
LF
Debit ($)
Credit ($)
Jan 01
Cash A/c Dr
To Note Payable
(Being amount borrowed from premier Bank through Note for a period of 4 months)
18,000
18,000
Jan 05
Cash Dr
To Sales Revenue
To Sale Tax Payable
(Being Goods sold at $ 6,254 inclusive of sales tax @ 6%)
6,254
5,900
354
Jan 12
Unearned Service Revenue Dr
To Service Revenue
(Being service rendered and the advance payment was received in past)
10,000
10,000
Jan 14
Sales Tax payable Dr
To Cash
(Being Sales Tax paid to Treasurer for the month of December’2013)
6,600
6,600
Jan 14
Accounts Receivable Dr
To Sales Revenue
To Sales Tax Payable
(Being 500 units sold at $ 48 per unit plus a sales tax @ 6%)
25,440
24,000
1,440
Jan 31
Interest Expenses A/c Dr
To Interest Payable
(Being amount due on Notes Payable @ 5% for the month of Jan’2014)
Interest = 18000*5% *1/12 = 75
75
75
Jan 31
Salaries & Wages Expenses Dr
To FICA Tax Payable
To Federal Income Tax Payable
To State Income Tax Payable
To Salaries & Wages Payable
(Being amount payable to Employees )
70,000
5,355
5,000
1,500
58,145
Jan 31
Payroll Tax Expenses Dr
To FICA Taxes Payable
(Being FICA Tax paid as an Payroll Tax Enpenses)
5,355
5,355
Date
Particulars
LF
Debit ($)
Credit ($)
Jan 01
Cash A/c Dr
To Note Payable
(Being amount borrowed from premier Bank through Note for a period of 4 months)
18,000
18,000
Jan 05
Cash Dr
To Sales Revenue
To Sale Tax Payable
(Being Goods sold at $ 6,254 inclusive of sales tax @ 6%)
6,254
5,900
354
Jan 12
Unearned Service Revenue Dr
To Service Revenue
(Being service rendered and the advance payment was received in past)
10,000
10,000
Jan 14
Sales Tax payable Dr
To Cash
(Being Sales Tax paid to Treasurer for the month of December’2013)
6,600
6,600
Jan 14
Accounts Receivable Dr
To Sales Revenue
To Sales Tax Payable
(Being 500 units sold at $ 48 per unit plus a sales tax @ 6%)
25,440
24,000
1,440
Jan 31
Interest Expenses A/c Dr
To Interest Payable
(Being amount due on Notes Payable @ 5% for the month of Jan’2014)
Interest = 18000*5% *1/12 = 75
75
75
Jan 31
Salaries & Wages Expenses Dr
To FICA Tax Payable
To Federal Income Tax Payable
To State Income Tax Payable
To Salaries & Wages Payable
(Being amount payable to Employees )
70,000
5,355
5,000
1,500
58,145
Jan 31
Payroll Tax Expenses Dr
To FICA Taxes Payable
(Being FICA Tax paid as an Payroll Tax Enpenses)
5,355
5,355