1. Piper Company records an adjusting entry for $10,000,000 of previously unreco
ID: 2456401 • Letter: 1
Question
1. Piper Company records an adjusting entry for $10,000,000 of previously unrecorded cash sales (costing $5,000,000) and its sales taxes at a rate of 4%. 2. The company earned $50,000 of $125,000 previously received in advance for services. Prepare any necessary adjusting entries at December 31, 2015, for Piper Company's year-end financial statements for each of the above separate transactions and events. (Piper has the policy of recording cash received in advance in balance sheet accounts.)
1.
Record the entry for cash sales and its sales taxes.
2.
Record cost of sales.
3.
The company earned $50,000 of $125,000 previously received in advance for services.
Explanation / Answer
Date Title debit credit 1 cash 10,000,000 *104% 10400000 sales 10000000 sales tax payable 400000 [being sales recorded] 2 COst of good ssold ,5,000,000 Inventory 5,000,000 [being cost of sales recorded] 3 Unearned service revenue 50000 service revenue 50000
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