Question

On January 1, 2021, the lediger of Accardo Company contains the following liability accounts Accounts Payable HST Payable Unearned Revenue $52,000 7,700 16,000 During January, the following selected transactions occurred Jan 2 Borrowed $27.000 from Canada Bank on a three month, 6%. $27,000 note 5 Sold merchandise for cash totalling $20.500 plus 13% HST. Ignore any cost of goods sold entry 12 Performed services for customers who had made advance payments at $10,000 The payment included HST of $1.151 Credit Service Revenue) 14 Pald Receiver General for HST invoiced in December 2020 $7,700 20 Sold 900 units of a new product on credit at 550 per unit plus 13% HST This new product is subject to a one-year warranty 25 Sold merchandise for cash totalling $12.500 plus 13% HST Journalize the January transactions (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required select "No Entry for the account the amounts. Record journal entries in the order presented in the problem and enter for Date Account Titles and Explanation Debit Credit Jan 5 Jan 20 Jan 31 - O Type here to search BAENG 15-01-2008

Answer 1

Answer -

Journalize the January transaction -

Date	Particular	Debit	Credit
Jan 2	Cash A/c Dr.	$27,000
	To Notes Payable A/c		$27,000
Jan 5	Cash A/c Dr.	$20,500
	To Sales revenue A/c (20,500 /(1+13%)		$18,142
	To HST Payable A/c ($18,142 × 13%)		$2,358
Jan 12	Unearned revenue A/c Dr.	$10,000
	To sales revenue A/c ($10,000 - $1,151)		$8,849
	To HST Payable A/c		$1,151
Jan 14	HST Payable A/c	$7,700
	To Cash		$7,700
Jan 20	Account Receivable A/c Dr. (sales revenue + HST)	$50,850
	To sales revenue (900 units × $50 per unit)		$45000
	To HST Payable A/c($45,000 × 13%)		$5,850
Jan 25	Cash A/c Dr.	$12,500
	To Sales revenue (12,500 /(1 + 13%)		$11,062
	To HST Payable A/c (11, 062 × 13%)		$1,438

2) 1)Journalize the adjusting entry at January 31 for the outstanding note payable.

Date	Particular	Debit	Credit
Jan 31	Interest Expense A/c Dr.	$45
	To Interest Payable		$45

Notes - Interest Payable

27,000 ×6% × 1/12 =$135

Interest Payable = $135 ×1/3 =$45

As because Borrowed $27,000 from Canada Bank on a three month, 6%. $27,000 note

2)2)Journalize the adjusting entry at January 31 for the Estimated Warranty Liability

Date	Particular	Debit	Credit
Jan 31	Warranty Expenses A/c	$3,150
	To Warranty Liability A/c		$3,150

Warranty Liability = 7% of sales of New Product sold.

Warranty Liability = 7% × $45,000

3)Prepare the current liabilities section of the balance sheet at January 31, 2021.

Accardo Company (Partial) Balance Sheet For January 31,2021
Current Liabilities :
Notes Payable	$27,000
Account Payable	$52,000
Unearned revenues ($16,000 - $10000)	$6,000
Warranty Liability	$3,150
Interest payable	$45
HST Payable ($2,358 + $1,151 +$5,850 +$1,438)	$10,797
Total Current Liabilities	98,992