PROBLEMS Prepare current liability entries adjusting entries, and current liabil

Question

PROBLEMS Prepare current liability entries adjusting entries, and current liabilities section. On January 1, 2017, the ledger of Romada Company contained these liability accounts. Accounts Payable Sales Taxes Payable Unearned Service Revenue $42,500 6,600 19,000 (LO 1, 4), AP GLS During January, the following selected transactions occurred. Jan. 1 5 12 Borrowed $18,000 in cash from, Apex Bank on a 4-month, 5%, $18,000 note. Sold merchandise for cash totaling $6,254, which includes 6% sales taxes. Performed services for customers who had made advance payments of $10,000. (Credit Service Revenue.) 14 Paid state treasurer's department for sales taxes collected in December 2016, 20 Sold 500 units of a new product on credit at $48 per unit, plus 6% sales tax. $6,600 During January, the company's employees earned wages of $70,000. Withholdings related to these wages were $5,355 for Social Security (FICA), $5,000 for federal income tax, and $1,500 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. Instructions (a) Journalize the January transactions. (b) Journalize the adjusting entries at January 31 for the outstanding note payable and for salaries and wages expense and payroll tax expense. (c) Prepare the current liabilities section of the balance sheet at January 31, 2017. Assume (c) Tot. current liabilities $146,724 no change in Accounts Payable.

Explanation / Answer

(b).

(c).

ROMADA COMPANY General journal for the month of January 2017 Date Account title Debit credit Jan.1 Cash 18000 Note payable 18000 (To record amountborrowedfrom Apex Bank ) Jan.5 Cash 6254 Sales revenue 5900 Sales tax payable 354 (To record sales for cash ) Jan.12 Unearned Service Revenue 10000 Service Revenue 10000 (To record service performed for the advance received) Jan.14 Sales tax payable 6600 Cash 6600 (To record remittance of sales tax for december) Jan.20 Accounts Receivable 25440 Sales revenue 24000 Sales tax payable 1440 (To record sale of 500 units @$48 per unit plus sales tax)

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