Listed below are a few transactions and events of Piper Company. 1. Piper Compan

Question

Listed below are a few transactions and events of Piper Company. 1. Piper Company records a year-end entry for $10,000 of previously unrecorded cash sales (costing $5,000) and its sales taxes at a rate of 4%. 2. The company earned $50,000 of $125,000 previously received in advance and originally recorded as unearned services revenue. Prepare any necessary adjusting entries at December 31, 2017, 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.)

Explanation / Answer

The transactions & events of Piper Company as on December 31, 2017 is recorded below

JOURNAL ENTRIES FOR PIPER COMPANY AS ON 31st DEC 2017 Sr No. Particulars Debit Credit 1a Cash A/C $10,400                  To Sales A/C $10,000                  To Sales Tax Payable A/C $400 ( Sales Tax @ 4% on sales) 1b Cost of Goods Sold A/c $5,000                   To Inventory A/c $5,000 ( Cost of Goods sold is $5,000 ) 2 Unearned Services Revenue A/c $50,000                   To Earned Services Revenue A/c $50,000 ( Earned $50,000 of $125,000 previously received in advance )

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