Question

On January 1,2022, the ledeer of Sheridan Company contained these liability accounts. Accounts Payable $43,200 Sales Taxes Payable 7,300 Unearned Service Revenue 19,700 During January, the following salectod transactions accurred. Barrownd $18000 In cash from Apcx Bank an a 4-month, S%, $18,000 notc. Jan 1 5 Sald merchandise for cash tataling $5,936, which includes 6% sales taxes 12 Performed services for customers who had made advance payments of $10,300 ICredit Service Revenue) 14 Pald state treasurer's department for sales taxns collected In December 2021, $7.300 Sald 570 units of a new product on credit at $52 per unit, plus S% sales tax 20 During January, the company's amplayees carmed wages of $80,co0. withholdings related to these wages wore $6,120 for Sadal Security (FICA). $5,629 for tederal income tax, and $1,68 9 tor state income tax. The campany owed no money related to these eamings for tederal ar state unemplayment tax. Assume that wages carned during January will be pald during February, No entry had boon recorded tor wages or payroll tax opense as of January 31. Journalize the January transactions (Credit account thies are automationily indented whan amount is entered. Do not indant manualy Record jaurnal entries in the order presented in the probiem. Round answers to nearest whale dollar amount, eg. 5,275 Account Titles and Explanation Date Debit Credit

Answer 1

S.l No.	Date	GL Account	Debit $	Credit $	Narration	Supporting Calculation
1	1-Jan	Cash A/c	18,000		Being money borrowed from Apex bank
		To 5% Note payable		18,000
2	5-Jan	Accounts Receivabe	5,936		Being merchandise sold and sales tax liability created	The Amount included 6 % of sales tax on value of merchandise sold (100%) hence the amount receivable equals 106% (100+6)	Hence sales tax = 5936*6/106=>336 Value of goods = 5936-336=>5600
		To Sale of merchandise		5,600
		To Sales Taxes Payable		336
3	12-Jan	Unearned Sales receivable	10,300		Being Unearned service revenue now earned by performing the services
		To Service revenue		10,300
4	14-Jan	To Sales Taxes Payable	7,300		Being outstanding state tax liability cleared by making payment
		To cash		7,300
5	20-Jan	Accounts Receivable	31,122		Being merchandise sold and sales tax liability created	Sales=570*52=>29640	Sales Tax= 29640*5%=1482
		TO Sales revenue		29,640
		To Sales Taxes Payable		1,482
6	31-Jan	Wages	80,000		Being outstanding liability for wages created
		To Wages Payable		66,562
		To Social security payable		6,120
		TO federal income tax payable		5,629
		To State income tax payable		1,689
7	31-Jan	Interest on Notes payable	75		Being outstanding liability for interest payable to bank created	18,000*5%*1/12= 75$ is the interest assuming 5% is annual interest rate
		To Interest on notes payable		75
Current Liabilities	Amount in $
5 % Note Payable	18,000.00
Wages Payable	66,562.00
Social security payable	6,120.00
federal income tax payable	5,629.00
State income tax payable	1,689.00
Interest on notes payable	75.00
Sales Taxes Payable (1482+336)	1,818.00
Accounts Payable	43,200.00
Unearned sales revenue ($19,700-10300)	9,400.00