Question

On January 1, 2022, the ledger of Ivanhoe Company contained these liability accounts.

Accounts Payable		$44,000
Sales Taxes Payable		8,100
Unearned Service Revenue		20,500

During January, the following selected transactions occurred.

Jan. 1		Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note.
5		Sold merchandise for cash totaling $6,360, which includes 6% sales taxes.
12		Performed services for customers who had made advance payments of $11,000. (Credit Service Revenue.)
14		Paid state treasurer’s department for sales taxes collected in December 2021, $8,100.
20		Sold 650 units of a new product on credit at $46 per unit, plus 6% sales tax.

During January, the company’s employees earned wages of $96,000. Withholdings related to these wages were $7,344 for Social Security (FICA), $5,086 for federal income tax, and $1,526 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.

Journalize the January transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to nearest whole dollar amount, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
choose a transaction date                                                                      Jan. 1Jan. 5Jan. 12Jan. 14Jan. 20Jan. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Jan. 5Jan. 12Jan. 14Jan. 20Jan. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Jan. 5Jan. 12Jan. 14Jan. 20Jan. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Jan. 5Jan. 12Jan. 14Jan. 20Jan. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Jan. 5Jan. 12Jan. 14Jan. 20Jan. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

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List of Accounts

  

  

Journalize the adjusting entries at January 31 for the outstanding note payable and for salaries and wages expense and payroll tax expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 31	enter an account title to record the interest on outstanding notes payable on January 31	enter a debit amount	enter a credit amount
	enter an account title to record the interest on outstanding notes payable on January 31	enter a debit amount	enter a credit amount
	(To record the interest on outstanding notes payable.)
Jan. 31	enter an account title to record payroll and withholding taxes on January 31	enter a debit amount	enter a credit amount
	enter an account title to record payroll and withholding taxes on January 31	enter a debit amount	enter a credit amount
	enter an account title to record payroll and withholding taxes on January 31	enter a debit amount	enter a credit amount
	enter an account title to record payroll and withholding taxes on January 31	enter a debit amount	enter a credit amount
	enter an account title to record payroll and withholding taxes on January 31	enter a debit amount	enter a credit amount
	(To record payroll and withholding taxes.)
Jan. 31	enter an account title to record employer's payroll taxes on January 31	enter a debit amount	enter a credit amount
	enter an account title to record employer's payroll taxes on January 31	enter a debit amount	enter a credit amount
	(To record employer’s payroll taxes.)

Answer 1

Date	Account Titles and Explanation	Debit($)	Credit($)
JOURNALIZE THE JANUARY TRANSACTIONS
Jan 1	Cash	18,000
	Notes Payable		18,000
	(Borrowed cash for a 4-month Note Payable)
Jan 5	Cash	6,360
	Sales Revenue ($6,360 x 100/106)		6,000
	Sales Tax Payable ($6,360 x 6/106)		360
	(Merchandise sold for cash)
Jan 12	Unearned Service Revenue	11,000
	Service Revenue		11,000
	(Payment advanced for performance of services)
Jan 14	Sales Tax Payable	8,100
	Cash		8,100
	(Payment of Sales Tax)
Jan 20	Accounts Receivable	31,694
	Sales Revenue (650 units x $46)		29,900
	Sales Tax Payable ($29,900 x 6%)		1,794
	(Product sold on credit)
JOURNALIZE THE ADJUSTING ENTRIES AT JANUARY 31
Jan 31	Interest Expense ($18,000 x 5% x 1/12)	75
	Interest Payable		75
	(To record the interest on outstanding notes payable.)
Jan 31	Salaries and Wages Expense	96,000
	FICA Social Security Tax Payable		7,344
	Federal Income Tax Payable		5,086
	State Income Tax Payable		1,526
	Salaries and Wages Payable		82,044
	(To record payroll and withholding taxes.)
Jan 31	Payroll Tax Expense	7,344
	FICA Social Security Tax Payable		7,344
	(To record employer’s payroll taxes.)