Journalize the adjusting entries at january 31 for 1 the, Ask an Expert

Accounting

On January 1, 2008, the ledger of Softshoe Company contains the following liability accounts.
Accounts Payable $30,000
Sales Taxes Payable 5,000
Unearned Service Revenue 12,000
During January the following selected transactions occurred.
Jan. 1 Borrowed $20,000 in cash from Platteville Bank on a 4-month, 6%, $20,000 note.
5 Sold merchandise for cash totaling $9,752, which includes 6% sales taxes.
12 Provided services for customers who had made advance payments of $8,000. (Credit
Service Revenue.)
14 Paid state treasurer's department for sales taxes collected in December 2007, $5,000.
20 Sold 900 units of a new product on credit at $44 per unit, plus 6% sales tax. This new
product is subject to a 1-year warranty.
25 Sold merchandise for cash totaling $16,536, which includes 6% sales taxes.
Instructions
(a) Journalize the January transactions.
(b) 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 5% of sales of the new product.
(c) Prepare the current liabilities

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9102578

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