On January 1, 2010, the ledger of Glennon Company contained these liability acco
ID: 2376493 • Letter: O
Question
On January 1, 2010, the ledger of Glennon 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 $15,000 in cash from Midland Bank on a 4-month 8%, $15,000 note.
Jan. 5 Sold merchandise for cash totaling $6,510, which includes 5% sales taxes.
Jan. 12 Provided services for customers who had made advance payment of $10,000. (Credit Service Revenue.)
Jan. 14 Paid state treasurer's department for sales taxes collected in December 2009, $6,600.
Jan. 20 Sold 500 units of a new product on credit at $48 per unit, plus 5% 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 January transactions. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Date Account/Description Debit Credit
Jan. 1
Jan. 5
Jan. 12
Jan. 14
Jan. 20
Journalize the adjusting entries at January 31 for the outstanding notes payable and for wages expense and payroll tax expense. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Date Account/Description Debit Credit
Jan. 31
(To record the adjusting entry for the outstanding notes payable.)
Jan. 31
(To record wages expense.)
Jan. 31
(To record payroll tax expense.)
Complete the current liabilities section of the balance sheet at January 31, 2010. Assume no change in Accounts Payable. (List notes payable then accounts payable with the rest of the accounts from largest to smallest amount, e.g. 10, 5, 2.)
Current Liabilities
$
Total Current Liabilities
$
Explanation / Answer
Jan. 1 Borrowed $15,000 in cash from Midland Bank on a 4-month 8%, $15,000 note. Correct Jan. 5 Sold merchandise for cash totaling $6,510, which includes 5% sales taxes. x + 0.05x = 6,510 x = 6,200 in sales Dr Cash 6,510 Cr Sales 6,200 Cr Sales Taxes Payable 310 Jan. 12 Provided services for customers who had made advance payment of $10,000. (Credit Service Revenue.) Dr Unearned Revenue 10,000 Cr Service Revenue 10,000 Jan. 14 Paid state treasurer's department for sales taxes collected in December 2009, $6,600. Dr Sales Taxes Payable 6,600 Cr Cash 6,600 Jan. 20 Sold 500 units of a new product on credit at $48 per unit, plus 5% sales tax Dr Accounts Receivable 25,200 Cr Sales 24,000 Cr Sales Taxes Payable 1,200 Journalize the adjusting entries at January 31 for the outstanding notes payable and for wages expense and payroll tax expense. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Jan. 31 Interest expense $100 Interest payable $100 Correct Jan. 31 Salaries and wages expense $70,000 FICA taxes payable $5,355 Federal income payable $5,000 State income payable $1,500 Cr Salaries and Wages Payable 58,145 Jan. 31 Payroll tax expense $5,355 FICA payable $5,355 Correct Complete the current liabilities section of the balance sheet at January 31, 2010. Assume no change in Accounts Payable. (List notes payable then accounts payable with the rest of the accounts from largest to smallest amount, e.g. 10, 5, 2.) Current liabilities Notes payable $15,000 (as stated) Accounts payable $42,500 (as stated) FICA payable $10,710 (5,355 x 2) Unearned service revenue $9,000 (19,000 - 10,000) Federal payable $5,000 (as stated) Sales tax payable $1,510 (as stated) State payable $1,500 (as stated) Total current liabilities $85,220
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