Problem 10-1A On January 1, 2017, the ledger of Blossom Company contained these

Question

Problem 10-1A On January 1, 2017, the ledger of Blossom Company contained these liability accounts. Accounts Payable Sales Taxes Payable Unearned Service Revenue $42,600 6,650 19,100 During January, the following selected transactions occurred Jan. 1 5 12 14 20 Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note. Sold merchandise for cash totaling $5,300, which includes 6% sales taxes. Performed services for customers who had made advance payments of $11,600. (Credit Service Revenue.) Paid state treasurer's department for sales taxes collected in December 2016, $6,650. Sold 510 units of a new product on credit at $45 per unit, plus 6% sales tax. 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

1)

2)

3)current liability

Date Account Debit credit jan1 cash 18000 Note payable 18000 jan5 cash 5300 sales revenue [5000/1.06] 5000 sales tax payable 300 jan12 unearned sales revenue 11600 sales revenue 11600 jan14 sales tax payable 6650 cash 6650 jan20 Accounts receivable 24327 sales revenue [510*45] 22950 sales tax liability [22950*.06] 1377

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