Problem 10-1A (Part Level Submission) On January 1, 2017, the ledger of Blossom

Question

Problem 10-1A (Part Level Submission) On January 1, 2017, the ledger of Blossom Company contained these liability accounts Accounts Payable Sales Taxes Payable Unearned Service Revenue $44,800 7,750 21,300 During January, the following selected transactions occurred. Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note. Sold merchandise for cash totaling $6,466, which includes 6% sales taxes. Performed services for customers who had made advance payments of $13,800. (Credit Service Revenue.) Paid state treasurer's department for sales taxes collected in December 2016, $7,750 Sold 730 units of a new product on credit at $45 per unit, plus 6% sales tax. Jan. 1 5 12 14 20 During January, the company's employees earned wages of $78,300. Withholdings related to these wages were $5,990 for Social Security (FICA), $5,593 for federal income tax, and $1,678 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.

Explanation / Answer

Date Account Debit credit jan1 cash 18000 note payable 18000 [being amount borrowed for 4 months against note] jan5 cash 6466 sales revenue [6466/1.06] 6100 sales tax payable 366 jan12 unearned service revenue 13000 service revenue 13000 jan14 sales tax payable 7750 cash 7750 jan 20 Accounts receivable 34821 sales revenue [730*45] 32850 sales tax payable [32850*.06] 1971 jan31 salary and wage expense 78300 FICA payable 5990 federal income tax payable 5593 state income tax payable 1678 salary and wage payable 65039

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