Received $42,000 cash from the issue of a short-term note with a 4 percent inter
ID: 2457063 • Letter: R
Question
Received $42,000 cash from the issue of a short-term note with a 4 percent interest rate and a one-year maturity. The note was made on April 1, 2016.
Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 5 percent.
Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until 2017.
Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 5 percent.
Paid the sales tax due on $117,000 of the service revenue. The sales tax on the balance of the revenue is not due until 2018.
The following transactions apply to Walnut Enterprises for 2016, its first year of operations:Explanation / Answer
2016 Event General Journal Debit Credit 1 Cash 42000 Notes Payable 42000 2 Cash 122850 Service Revenue 117000 Sales Tax Payable: 117000*5% 5850 3 Operating Expenses 715000 Cash 715000 4 Sales Tax Payable: (97000*5%) 4850 Cash 4850 5 Interest Expense: 42000*4%*9/12 1260 Interest Payable 1260 2017 Event General Journal Debit Credit 1 Sales Tax Payable: (5850-4850) 1000 Cash 1000 2 Cash 149100 Service Revenue 142000 Sales Tax Payable: 142000*5% 7100 3 Interest Expense: 42000*4%*3/12 420 Interest Payable 1260 Notes Payable 42000 Cash 43680 4 Operating Expenses 84500 Cash 84500 5 Sales Tax Payable: (117000*5%) 5850 Cash 5850
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