On January 1, 2015, the ledger of Accardo Company contains the following liabili

Question

On January 1, 2015, the ledger of Accardo Company contains the following liability accounts. Accounts Payable $52,810 Sales Taxes Payable 8,770 Unearned Service Revenue 16,470 During January, the following selected transactions occurred. Jan. 5 Sold merchandise for cash totaling $21,384, which includes 8% sales taxes. 12 Performed services for customers who had made advance payments of $11,590. (Credit Service Revenue.) 14 Paid state revenue department for sales taxes collected in December 2014 ($8,770). 20 Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax. 21 Borrowed $29,250 from Girard Bank on a 3-month, 8%, $29,250 note. 25 Sold merchandise for cash totaling $11,556, which includes 8% sales taxes. Journalize the January transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 5 Jan. 12 Jan. 14 Jan. 20 Jan. 21 Jan. 25 SHOW LIST OF ACCOUNTS LINK TO TEXT Journalize the adjusting entries at January 31 for the outstanding notes payable. (Hint: Use one-third of a month for the Girard Bank note.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 31 SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the current liabilities section of the balance sheet at January 31, 2015. Assume no change in accounts payable. Accardo Company Balance Sheet (Partial) January 31, 2014 $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT

Explanation / Answer

Journal Entries are attached in the Word Document

Amount (Dr)

($)

Amount (Cr)

($)

Balance Sheet (Liablities) of Accardo Company as as January 31, 2015

Other Current Liabilities

Date Journal

Amount (Dr)

($)

Amount (Cr)

($)

05 Jan Cash on Hand Account                          Dr 21,384.00 To Sales Account 19,800.00 To Sales Tax Payable Account 1,584.00 (Being merchandise sold on cash which includes 8% of Sales Tax Payable)
Sales Tax = (21384/108)*100 Jan 12 Service Revenue                                               Dr 11,590.00 To Advance from Customers 11,590.00 (Being advance received from the customers for services performed) Jan 14 Sales Tax Payable                                             Dr 8,770.00 To Cash on Hand 8,770.00 (Being Sales Tax of December 2014 paid to the Revenue Department) Jan 20 Trade Receivables Account                                Dr 48,600.00 To Sales Tax Payable 3,600.00 To Sales Account 45,000.00 (Being 200 units of goods sold on credit at $50 per unit and 8% sales Tax levied)
(Sales = 900 * 50 = $45,000
Sales Tax Payable = $45000 * 8% = $3600) Jan 21 Cash on hand Account                                      Dr 29,250.00 To 8% Girard Bank Note 29,250.00 (Being $29250 note Borrowed from Girard Bank at 8% for three-months) Jan 25 Cash on hand Account                                      Dr 11,556.00 To Sales Account 10,700.00 To Sales Tax Payable Account 856.00 (Being merchandise sold on cash which includes 8% of Sales Tax Payable)
Sales Tax = (11556/108)*100 Jan 31 Unearned Service Revenue                                Dr 11,590.00 To Service Revenue 11,590.00 (Being Unearned Service Revenue booked as a liability as it has not yet been earned by the company and Service Revenue transferred to Revenue Account Jan 31 Interest Expense                                               Dr 195.00 To Interest Payable Account 195.00 (Being Interest Expense of $195 booked as an Expenditure for current year and transferred to Liabilities Account as the amount has not been paid)
(Interest Expense = {($29250 * 8%} * 3/12 * 1/3)

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