Question 4 Date Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNT
ID: 2401830 • Letter: Q
Question
Question 4
Date
Account Titles and Explanation
Debit
Credit
SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
No.
Date
Account Titles and Explanation
Debit
Credit
SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
Question 4
On January 1, 2017, the ledger of Accardo Company contains the following liability accounts.Accounts Payable $57,000 Sales Taxes Payable 8,900 Unearned Service Revenue 17,000
During January, the following selected transactions occurred.
Jan. 5 Sold merchandise for cash totaling $22,400, which includes 12% 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 2016 ($8,900). 20 Sold 900 units of a new product on credit at $50 per unit, plus 12% sales tax. This new product is subject to a 1-year warranty. 21 Borrowed $27,000 from Girard Bank on a 3-month, 12%, $27,000 note. 25 Sold merchandise for cash totaling $13,440, which includes 12% sales taxes.
Explanation / Answer
Journal entries - Januray Transactions Current liabilities section of the balance sheet at January 31, 2017 Date Account Titles and Explanation Debit Credit Accardo Company Jan.5 Cash $22,400.00 Balance Sheet (Partial) Sales $20,000.00 For the Year Ended January 31, 2017 Sales Tax Payable $2,400.00 Current Liabilities (recording of merchandise sold on cash) Accounts Payable $57,000.00 Sales Taxes Payable $9,240.00 Jan.15 Unearned Service Revenue $10,000.00 Unearned Service Revenue $7,000.00 Service Revenue $10,000.00 12% Note Payable (due in 3 months) $27,000.00 (recording of service revenue against advance received) Interest Payable on Note $90.00 Estimated Warranty Liability $5,390.00 Jan.14 Sales Taxes Payable $8,900.00 Total Current Liabilities $105,720.00 Cash $8,900.00 (recording payment of sales tax liability) Jan.20 Accounts Receivables $50,400.00 Sales $45,000.00 Sales Tax Payable $5,400.00 (recording of merchandise sold on account) Jan.21 Cash $27,000.00 12% Notes Payable (Girard Bank) $27,000.00 (recording of amount borrowed on 3 month note @ 12%) Jan.25 Cash $13,440.00 Sales $12,000.00 Sales Tax Payable $1,440.00 (recording of merchandise sold on cash) Adjusting entries as on Jan.31 Date Account Titles and Explanation Debit Credit Jan.31 Interest Expense $90.00 Interest Payable on Note $90.00 (recording of interest accrued on note for 1/3rd of month) Jan.31 Warranty Expense $5,390.00 Estimated Warranty Liability $5,390.00 (recording of warranty liability for January @ 7% of sales) Interest accrued on Note as on Jan.31 = [$27000*12%/12 months] / 3 = $90 Estimated warranty liability for January = Total sales in the month * Warranty cost % = $77000 * 7% = $5390
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