On January 1, 2017, the ledger of Accardo Company contains the following liability accounts.
| Accounts Payable |
$53,500 |
| Sales Taxes Payable |
7,800 |
| Unearned Service Revenue |
15,500 |
During January, the following selected transactions occurred.
| Jan. 5 |
Sold merchandise for cash totaling $19,872, which includes 8% sales taxes. |
| 12 |
Performed services for customers who had made advance payments of $10,000. (Credit Service Revenue.) |
| 14 |
Paid state revenue department for sales taxes collected in December 2016 ($7,800). |
| 20 |
Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax. This new product is subject to a 1-year warranty. |
| 21 |
Borrowed $29,250 from Girard Bank on a 3-month, 8%, $29,250 note. |
| 25 |
Sold merchandise for cash totaling $11,988, which includes 8% sales taxes.
|
Journalize the January transactions.
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 7% of sales of the new product. (Hint: Use one-third of a month for the Girard Bank note.)
Prepare the current liabilities section of the balance sheet at January 31, 2017. Assume no change in accounts payable.