E9-22A (similar to) Question Help Tier World Publishing completed the following

Question

E9-22A (similar to) Question Help Tier World Publishing completed the following transactions for one subscriber during 2016 Oct 1 Nov 15 Dec 31 sold a one-year subscription, collecting cash of $2.100, plus sales tax of 7%. Remitted (paid) the sales tax to the state of North Carolina. Requirement 1. Joumalize these transactions (explanations not required). Then report any liability on the company's balance sheet at December 31, 2016. (Record debits first then credits. Exclude explanations from journal entries.)

Explanation / Answer

Journal Entries: Dr in $ Cr in $ Oct 1: Cash Account Dr (2100+7%) 2247 Unearned Service revenue Cr. 2100 Sales tax payable Cr. 147 Nov15: Sales tax payable Dr. 147 Cash account Cr. 147 Dec 31: Unearned Service revenue Dr. 525 Service revenue Cr. 525 (Revenue recognize for three month @ 2100/12 =175 per month) Balance Sheet: Liabilities: Unearned Service Revenue ( 2100 -525) $1,575

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