Exercise 9-2 Recording known current liabilities LO C2 Listed below are a few tr

Question

Exercise 9-2 Recording known current liabilities LO C2 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 eamed $50,000 of $125,000 previously received in advance for services. Prepare any necessary adjusting entries at December 31, 2015, 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.) View transaction list Journal entry worksheet Record the entry for cash sales and its sales taxes. Note: Enter debits before credits. Transaction General Journal Debit Credit 01(a) Record entry Clear entry View general journal 0 F2 F3 . FS F6 F7

Explanation / Answer

JOURNAL ENTRIES:

a) Dr. Cash 10,400 Sales 10,000

Cr. Sales taxes payable 400

(b) Dr. Cost of goods sold 5,000

Cr. Merchandise inventory 5,000

(c) Dr. Unearned services revenue 50,000

Cr. Earned services revenue 50,000

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