Question

p11-1a problems a,b,c

P11-1A on January 1, 2017, the ledger of Accardo Company contains the following liability accounts. Prepare current liability entries, adjusting entries, and current liabilities section (LO 1,2) GLS Accounts Payable $52.000 Sales Taxes Payable 7,700 Unearned Service Revenue 16,000 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 $10,000. (Credit Service Revenue.) 14 Paid state revenue department for sales taxes collected in December 2016 ($7,700). 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 $27,000 from Girard Bank on a 3-month, 8%, $27,000 note. 25 Sold merchandise for cash totaling $12,420, which includes 8% sales taxes. Instructions (a) Journalize the January transactions. (6) Journalize the adjusting entries at January 31 for (1) the outstanding notes payable, and (2) estimated warranty liability, assuming warranty costs are expected to equal 7% of sales of the new product. (Hint: Use one-third of a month for the Girard Bank note.) (e) Prepare the current liabilities section of the balance sheet at January 31, 2017. Assume no change in accounts payable. (c) Current liability total 594,250

Answer 1

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Part a
Date	Account	Debit	Credit
Jan 5	Cash	$   20,520
	Sales Revenue ($20.520/108%)		$   19,000
	Sales Tax Payable ($19,000*8%)		$     1,520
	(To record sale of merchandise)
Jan 12	Unearned Service Revenue	$   10,000
	Service Revenue		$   10,000
	(To record revenue earned agains advance)
Jan 14	Sales Tax Payable	$     7,700
	Cash		$     7,700
	(To record payment of sales tax)
Jan 20	Accounts Receivable	$   48,600
	Sales Revenue (900*$50)		$   45,000
	Sales Tax Payable ($45,000*8%)		$     3,600
	(To record sale of merchandise)
Jan 21	Cash	$   27,000
	Note Payable		$   27,000
	(To record money borrowed)
Jan 25	Cash	$   12,420
	Sales Revenue ($12.420/108%)		$   11,500
	Sales Tax Payable ($11,500*8%)		$         920
	(To record sale of merchandise)
Part b
Date	Account	Debit	Credit
Jan 31	Interest Expense	$           60
	Interest Payable		$           60
	(To record interest expense) $27,000*8%*1/12*1/3
Jan 31	Warranty Expense	$     3,150
	Estimated warranty Payable		$     3,150
	(To record warranty expense) $45,000*7%
Part c
	Current Liabilities:
	Accounts Payabl;e		$   52,000
	Sales Tax Payable		$     6,040
	Unearned Service Revenue		$     6,000
	Note Payable		$   27,000
	Interest Payable		$           60
	Warranty Liability		$     3,150
	Curret Liabilities		$   94,250