Problem 10-1A On January 1, 2014, the ledger of Hiatt Company contained these li

Question

Problem 10-1A On January 1, 2014, the ledger of Hiatt Company contained these liability accounts. Accounts Payable Sales Taxes Payable Unearned Service Revenue $42,500 6,600 19,000 Unearned Service During January, the following selected transactions occurred Borrowed $18,000 in cash from Premier Bank on a 4-month, 596, $18,000 Sold merchandise for cash totaling $6,254, which includes 6% sales taxes Performed services for customers who had made advance payments of $10,000. (Credit Service Revenue.) Paid state treasurer's department for sales taxes collected in December 2013, $6,600 Sold 500 units of a new product on credit at $48 per unit, plus 6% sales tax. Jan. 1 5 12 14 20 and g1,soo for state During January, the company's employees earned wages of $70,000. Withholdings related to these wages were $5,355 for Social Security (FICA), $5,000 for federal income tax, and $1,500 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

Explanation / Answer

Jan 1       Cash dr                                                  18000

                Notes Payable                                                                   18000

( being notes payable issued)

Jan 5    Cash dr                                                   6254

             Merchandise Sales                                                             5900

             Sales Tax                                                                                 354

(being cash sold)

Jan 12   Accounts Receivable                       10000

                    Sales                                                                  10000

(Being services performed for customers)

Jan 14    Sales tax dr                                6600

                       Cash                                                                               6600

(being sales tax paid)

Jan 5   Accounts Receivable dr                                                   24000

             Merchandise Sales                                                             22560

             Sales Tax                                                                                   1440

(being product sold on credit basis)

Salaries & Wages                                        70,000

    Social Security tax                                                                        5355

   Federal Income tax                                                                      5000

State income tax                                                                              1500

Salaries & wages o/s                                                                       58145

(being wages entry booked)

Current Liabilities

Accounts payable                                                            42500

Sales tax payable                                                                1794                                                                   

Salaries & wages o/s                                                       58145

Unearned service revenue                                        9000

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