Date Account Titles and Explanation Debit Credit Date Account Titles and Explana
ID: 2570414 • Letter: D
Question
Date
Account Titles and Explanation
Debit
Credit
Date
Account Titles and Explanation
Debit
Credit
HIATT COMPANY
Balance Sheet (Partial)
January 31, 2014
Open Show Work
On January 1, 2014, the ledger of Hiatt Company contained these liability accounts.Accounts Payable $56,340 Sales Taxes Payable 7,370 Unearned Service Revenue 37,720
During January, the following selected transactions occurred.
Jan. 1 Borrowed $15,600 in cash from Premier Bank on a 4-month, 5%, $15,600 note. 5 Sold merchandise for cash totaling $6,572, which includes 6% sales taxes. 12 Performed services for customers who had made advance payments of $29,389. (Credit Service Revenue.) 14 Paid state treasurer’s department for sales taxes collected in December 2013, $7,370. 20 Sold 600 units of a new product on credit at $54 per unit, plus 6% sales tax.
During January, the company’s employees earned wages of $71,210. Withholdings related to these wages were $5,448 for Social Security (FICA), $5,086 for federal income tax, and $1,526 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
Date Account Titles and Explanation Debit Credit Jan. 1 Cash $ 15,600 Notes Payable $ 15,600 Jan. 5 Cash $ 6,572 Sales Revenue $ 6,200 6572/106% Sales Tax Payable $ 372 Jan. 12 Unearned Service Revenue $ 29,389 Service Revenue $ 29,389 Jan. 14 Sales Tax Payable $ 7,370 Cash $ 7,370 Jan. 20 Accounts Receivable $ 34,344 Sales Revenue $ 32,400 (600 x 54) Sales Tax Payable $ 1,944 (32400 x 6%) Date Account Titles and Explanation Debit Credit Jan. 31 Interest Expense $ 65 (15600 x 5% x 1/12) Interest Payable $ 65 (To record the interest on outstanding notes payable.) Jan. 31 Salaries And Wages Expenses $ 71,210 FICA Taxes Payable $ 5,448 Federal Income Taxes Payable $ 5,086 State Income Taxes Payable $ 1,526 Salaries and Wages Payable $ 59,150 (To record payroll and withholding taxes.) Jan. 31 Payroll Taxes Expenses $ 5,448 FICA Taxes Payable $ 5,448 (To record employer’s payroll taxes.) HIATT COMPANY Balance Sheet (Partial) As of the end of the month January 31, 2014 Current Liabilities Accounts Payable $ 56,340 Sales Taxes Payable 2,316 Unearned Service Revenue 8,331 Notes Payable 15,600 Interest Payable 65 FICA Taxes Payable 10,896 Federal Income Taxes Payable 5,086 State Income Taxes Payable 1,526 Salaries and Wages Payable 59,150 Total Current Liabilities $159,310
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