Question

On January 1, 2017, the ledger of Accardo Company contains the following liability accounts.

Accounts Payable		$56,500
Sales Taxes Payable		8,600
Unearned Service Revenue		16,000

During January, the following selected transactions occurred.

Jan. 5		Sold merchandise for cash totaling $21,600, which includes 8% sales taxes.
12		Performed services for customers who had made advance payments of $11,500. (Credit Service Revenue.)
14		Paid state revenue department for sales taxes collected in December 2016 ($8,600).
20		Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax. This new product is subject to a 1-year warranty.
21		Borrowed $22,500 from Girard Bank on a 3-month, 8%, $22,500 note.
25		Sold merchandise for cash totaling $12,960, which includes 8% sales taxes.

Answer 1

Req 1.
Journal entries:
Date	Accounts title and explanations				Debit $	Credit $
05.01.17	Cash account				21600
	Sales revenue (21600/108*100)					20000
	Sales tax payable (21600/108*8)					1600
12.01.17	Unearned service revenue				11500
	Service revenue					11500
14.01.17	Sales tax payable				8600
	Cash account					8600
20.01.17	Accounts recievable				48600
	Sales revenue (900 units @ 50)					45000
	Sales tax payable (45000*8%)					3600
21.01.17	Cash account				22500
	Notes payable					22500
25.01.17	Cash account				12960
	Sales revenue (12960/108*100)					12000
	Sales tax payable (12960/108 *8)					960
Adjusting entries:
Date	Accounts title and explanations				Debit $	Credit $
31.01.17	Interest expenses				50
	Interest payable (22500*8% *10/360)					50
31.01.17	Warranty expenses				3150
	Estimated Warranty liabilities					3150
	(45000*7%)
Note: Warranty expenses is 7% f sales revenue of new product only i.e. 45000.
Current Liabilities:
Accounts payable				56500
Sales tax payable (1600+3600+960)				6160
Notes Payable				22500
Unearned service revenue (16000-11500)				4500
Interest Payable				50
Estimated warranty liability				3150
Total Current liabilities				92860