Question

On January 1,2020, the ledger of Novak Corp.contains the following liability accounts Accounts Payable $53500 Sales Taxes Payable 8,300 Unearned Service Revenue 15800 During January,the following selected transactions occurred Jan. 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($8,300 20 Sold 960 units of a new product on credit at $50 per unit, plus 8% sales tax. 21 Borrowed $31,500 from Girard Bank on a 3-month, 8%, $31,500 note. 25 Sold merchandise for cash totaling $12,420, which includes 8% sales taxes. Your answer is incorrect. Journalize the January transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manualiy. Record journal entries In the order presented in the probiem.) Debit Date Account Titles and Explanation Credit

Answer 1

Account Titles and Explanation Debit Date Credit Cash Jan 5 20,520 Sales revenue (20,520 / 108% 19,000 Sales tax payable (20,520 -19,000 1,520 (to record sales) Jan 12 Unearned Service Revenue 11,000 Service revenue 11,000 (to record service performed Sales tax pavable Jan 14 8,300 Cash 8,300 (to record sales tax paid) Jan 20 Accounts receivable (48,000+3,840 51,840 Sales revenue (960 x $50 48,000 Sales tax payable (48,000 x 8% 3,840 (to record credit sales Jan 21 Cash 31,500 Notes payable 31,500 (to record cash borrowed Jan 25 Cash 12,420 Sales revenue (12,420 / 108% 11,500 Sales tax payable (12,420-11,500 920 (to record sales)

Recording of Adiusting Entries Account Titles and Explanation Debit Date Credit Jan 31 Interest expense 70 Interest payable 70 to record interest incurred but not vet paid Working Notes $ 31,500 Amount Borrowed Rate of interest 8% Interest per month (31,500 x 8% x 1/12 Interest for January (210 x 1/3 210 70 Current Liabilities of Novak Co Novak Cor Balance Sheet (Partial January 31, 2020 Current Liabilities: Notes payable 31,500 Accounts payable 53,500 Sales tax payable 6,280 Unearned Service Revenue (15,800 11,000 4,800 Interest payable 70 Total Current Liabilities 96,150 Working Notes: Sales tax able Balance Jan 5 sales 1,520 Jan 20 Sales 3,840 Jan 25 Sales 920 Total Sales tax payable 6,280