Question

Will Rate:

P13.2B (LO 1,3) (Liability Entries and Adjustments) Listed below are selected transactions of Jian Furniture Store for the current year ending December 31. 1. On December 1, the store purchased for cash two delivery trucks for $70,000. The trucks were purchased in a state that applies a 6% sales tax. 2. On December 10, the store received $2,000 from the local community theater as a deposit to be returned after certain fur- niture to be used in stage production was returned on January 10. 3. During December, cash and credit card sales totaled $524,000, which includes the 6% sales tax that must be remitted to the state by the fifteenth day of the following month. 4. The store determined it will cost $78,000 to restore the area (considered a land improvement) surrounding one of its park- ing lots, when the store is closed in 5 years. Jian estimates the fair value of the obligation at December 31 is $61,500. Instructions Prepare all the journal entries necessary to record the transactions noted above as they occurred and any adjusting journal en- tries relative to the transactions that would be required to present fair financial statements at December 31. Date each entry. For simplicity, assume that adjusting entries are recorded only once a year on December 31. (Round computations to nearest dollar.)

Answer 1

Solution Date Particulars Debit Gredst 1-Dec Purchase al or 70000 4200 74200 salez Tax al or To cash al er [Being delivery trucks purchased in cash] cash alc Dr Theater's al or [Being cash deposit received from Local theater] to bec 2000 2000 31 Dec Accounts recelvable or 524000 sales ar 492560 31440 Sales Tax Uability ar [ Beeng cash and Gredet sales booked] 15 Jan px | 31440 Solus Toy Asu To sath ar [ Being Sales Tax 31440 paid ] 131 Dec 98000 78000 capital expenditure alcar To cash ale [Being Land development experditure booked ]