December revenue totaled $ 130,000; and, in addition, Salt Air collected sales t

Question

December revenue totaled $ 130,000; and, in addition, Salt Air collected sales tax of 6%. The tax amount will be sent to the state of North Carolina early in January.

b. On August 31, Salt Air signed a six-month, 6% note payable to purchase a boat costing $ 90,000. The note requires payment of principal and interest at maturity.

c. On August 31, Salt Air received cash of $ 1,200 in advance for service revenue. This revenue will be earned evenly over six months.

d. Revenues of $ 825,000 were covered by Salt Air's service warranty. At January 1, estimated warranty payable was $ 11,300. During the year, Salt Air recorded warranty expense of $ 33,000 and paid warranty claims of $ 34,500.

e. Salt Air owes $ 70,000 on a long-term note payable. At December 31, 12 % interest for the year plus $ 35,000 of this principal are payable within one year.

Requirement

1.

Salt AirSalt Air

Account

Amount

a.

b.

c.

d.

e.

Choose from any list or enter any number in the input fields and then continue to the next question.

1.

For each item, indicate the account and the related amount to be reported as a current liability on the

Salt AirSalt Air

Marine balance sheet at December 31.

Explanation / Answer

Account Amount a Sales Tax Payable 7800 (130000*0.06) b Note Payable 90000 Interest Payable 1800 90000*0.06*(4/12) c Unearned Service Revenue 400 d Warranty Payable 9800 e Note Payable 35000 Interest Payale 8400 (70000*0.12)

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