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On January 1, 2015, the ledger of Accardo Company contains the following liability accounts. Accounts Payable...

On January 1, 2015, the ledger of Accardo Company contains the following liability accounts. Accounts Payable $52,420 Sales Taxes Payable 7,150 Unearned Service Revenue 16,740 During January, the following selected transactions occurred.

Jan. 5 Sold merchandise for cash totaling $16,740, which includes 8% sales taxes.

Jan 12 Performed services for customers who had made advance payments of $11,320. (Credit Service Revenue.)

Jan 14 Paid state revenue department for sales taxes collected in December 2014 ($7,150).

Jan 20 Sold 950 units of a new product on credit at $50 per unit, plus 8% sales tax.

Jan 21 Borrowed $24,750 from Girard Bank on a 3-month, 8%, $24,750 note.

Jan 25 Sold merchandise for cash totaling $7,560, which includes 8% sales taxes.

1) Journalize the adjusting entries at January 31 for the outstanding notes payable. (Hint: Use one-third of a month for the Girard Bank note.)

2) Prepare the current liabilities section of the balance sheet at January 31, 2015. Assume no change in accounts payable.

Date      Account Titles and Explanation    Debit      Credit

Solutions

Expert Solution

1)

Date Account Titles Debit Credit
Jan-05 Cash $     16,740
      Sales Revenue $     15,500
      Sales Tax Payable $       1,240
Jan-12 Unearned Revenue $     11,320
      Service Revenue $     11,320
Jan-14 Sales Tax Payable $       7,150
      Cash $       7,150
Jan-20 Accounts Receivable $     51,300
      Sales Revenue $     47,500
      Sales Tax Payable $       3,800
Jan-21 Cash $     24,750
      Notes Payable $     24,750
Jan-25 Cash $       7,560
      Sales Revenue $       7,000
      Sales Tax Payable $           560

Adjusting entry

Date Account Titles Debit Credit
Jan-31 Interest Expense $             55
      Interest Payable $             55

2)

Current Liabilities
Accounts Payable $     52,420
Sales Tax Payable $       5,600
Unearned Service Revenue $       5,420
Notes Payable $     24,750
Interest Payable $             55
Total Current Liabilities $     88,245

ekkarill92 answered 1 year ago
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