Question

On January 1, 2017, the ledger of Sheridan Company contained these liability accounts. Accounts Payable $44,300 Sales Taxes Payable 7,500 Unearned Service Revenue 20,800 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 $6,254, which includes 6% sales taxes. 12 Performed services for customers who had made advance payments of $12,500. (Credit Service Revenue.) 14 Paid state treasurer’s department for sales taxes collected in December 2016, $7,500. 20 Sold 680 units of a new product on credit at $53 per unit, plus 6% sales tax. During January, the company’s employees earned wages of $70,300. Withholdings related to these wages were $5,378 for Social Security (FICA), $5,021 for federal income tax, and $1,506 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.

Answer 1

Date	Account	Debit	credit
Jan1	cash	18000
	Note payable		18000
	[Being amount borrowed against note]
Jan5	cash	6254
	sales revenue [6254/1.06]		5900
	sales tax payable		354
jan12	Unearned service revenue	12500
	service revenue		12500
jan14	Sales tax payable	7500
	cash		7500
jan20	Accounts receivable	38202.4
	sales revenue   [680*53]		36040
	sales tax payable [36040*.06]		2162.40
jan31	Salaries and wage expense	70300
	FICA Payable		5378
	Federal income tax witholdings		5021
	state income tax		1506
	Salaries and wagepayable		58395
b	Payroll tax expense	5378
	FICA payable		5378
	[being employer conribution for FICA recorded]