Question

Problem 11-01A a-c (Video) On January 1, 2020, the ledger of Sunland Company contains the following liability accounts Accounts Payable Sales Taxes Payable Unearned Service Revenue $56,500 7,900 15,500 During January, the following selected transactions occurred. Jan. 5 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes. 12 Performed services for customers who had made advance payments of $11,000. (Credit Service Revenue.) 14 Paid state revenue department for sales taxes collected in December 2019 ($7,900), 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 $24,750 from Girard Bank on a 3-month, 8%, $24.750 note. 25 Sold merchandise for cash totaling $11,016, which includes 8% sales taxes.

Answer 1

SUNLAND COMPANY
Balance sheet ( partial )
January 31,2020
Current liabilities :
Notes payable	$ 24750
Account payable	$ 56,500
sales tax payable (1520+3600+816)	$ 5,936
unearned service revenue ( 15,500 - 11,000)	$ 4,500
interest payable	$ 55
Total current liabilities	$ 91,741

NOTES:

DATE	ACCOUNTS TITLE AND EXPLANATION	DEBIT	CREDIT
Jan-05	cash	$ 20,520
	sales revenue ( $ 20,520*100 %/108 %)		$ 19,000
	sales taxes payable ($ 20,520-19,000)		$ 1,520
	( to record sold merchandise for cash )
Jan-12	unearned service revenue	$ 11,000
	Service revenue		$ 11,000
	(to record performed service for advance payment )
Jan-14	sales tax payable	$ 7,900
	Cash		$ 7,900
	( to record sales tax paid )
Jan-20	Accounts receivable ($ 45,000+$ 3,600 )	$ 48,600
	Sales revenue ( 900 units *$ 50 )		$ 45,000
	sales tax payable ( $ 45,000*8%)		$ 3,600
	( to record sales of new products of 900 units @50 per unit )
Jan-21	cash	$ 24,750
	Notes payable		$ 24,750
	( to record note from girard bank )
Jan-25	cash	$ 11,016
	sales revenue ( $ 11,016*100 %/108 %)		$ 10,200
	sales taxes payable ($ 11,016-10,200)		$ 816
	( to record sold merchandise for cash )
Jan-31	interest expense	$ 55
	interest payable ( $ 24,750 * 8 %*10/360 )		$ 55
	( assumed no of days in a year is 360 days )
	( to record adjustment entry for interest on note )