Question

PRINTER VERSION BACK NEXT CALCULATOR Problem 10-01A On January 1, 2022, the ledger of Carla Vista Co. contained these liability accounts Accounts Payable $43,400 Sales Taxes Payable Unearned Service Revenue 7.500 carosenice Revenue 19.900 During January, the following selected transactions occurred. Jan. 1 5 12 14 20 Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note Sold merchandise for cash totaling $6,360, which includes 6% sales taxes Performed services for customers who had made advance payments of $11,200. (Credit Service Revenue.) Paid state treasurer's department for sales taxes collected in December 2021, $7,500. Sold 590 units of a new product on credit at $50 per unit, plus 6% sales tax During January, the company's employees earned wages of $84,000. Withholdings related to these wages were $6,426 for Social Security (FICA), $5,271 for federal income tax, and $1,581 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.) Debit Credit Date Account Titles and Explanation

Answer 1

Solution Required (a): Journal entry for January transactions Jan 1, 2022 Account Titles and Explanation Cash Notes Payable (To record borrowings on 4 month 5% note) $18,000 $18,000 Credit Date Jan 5, 2022 Debit $6,3601 Account Titles and Explanation Cash Sales Revenue ($6,360 x 100/106) Sales Taxes Payable ($6,000 x 6%) (To record sale of merchandise for cash) $6,000 $360 Credit Date Jan 12, 2022 Account Titles and Explanation Unearned Service Revenue Service Revenue Debit $11,200 $11,200 (To record service revenue from unearned service revenue for services performed) Credit Debit $7,500 Jan 14, 2022 Account Titles and Explanation Sales Taxes Payable Cash (To record sales taxes payment made for December 2021) $7,500 Date Credit Debit $31,270 Jan 20, 2022 I Account Titles and Explanation Accounts Receivables ($50 x 590 x 106%) Sales Revenue ($50 x 590) Sales Taxes Payable ($29,500 x 6%) (To record sale of merchandise on credit) $29,500 $1,770 Credit Date Jan 31, 2022 Debit $75 Account Titles and Explanation Interest expense ($18,000 x 5% x 1/12) Interest payable (To record the interest on outstanding notes payable) Credit Date Jan 31, 2022 Debit $84,000 Account Titles and Explanation Salaries and Wages expense FICA taxes payable Federal Income taxes payable State Income taxes payable Salaries and Wages Payable (Bal. fig.) (To record payroll and withholding taxes) $6,426 $5,271 $1,581 $70,722 | Credit Date Jan 31, 2022 Debit | $6,4261 Account Titles and Explanation Payroll Taxes expense FICA taxes payable (To record employer's payroll taxes) $6,426 Required (b): Current liabilities section of the balance sheet at January 31, 2022 CARLA VISTA CO. Balance Sheet (Partial) As at January 31, 2022 Current liabilities: Accounts Payable Sales Taxes Payable ($360+ $1,770) Unearned Service Revenue ($19,900 - $11,200) Notes Payable Interest Payable FICA taxes payable Federal Income taxes payable State Income taxes payable Salaries and Wages Payable Total current liabilities $43,400 $2,130 $8,700 $18,000 $75 $12,852 $5,271 $1,581) $70,722 $162,731