On January 1, 2019, the ledger of Accardo Company contains the following liability accounts.

On January 1, 2019, the ledger of Accardo Company contains the following liability accounts.

Accounts Payable        $52,000
Sales Taxes Payable        7,700
Unearned Service Revenue        16,000

During January, the following selected transactions occurred.

Jan. 5        Sold merchandise for cash totaling $20,520, 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 2018 ($7,700).
20        Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax.
21        Borrowed $27,000 from Girard Bank on a 3-month, 8%, $27,000 note.
25        Sold merchandise for cash totaling $12,420, which includes 8% sales taxes.

Journalize the January transactions.



Explanation
 Jan. 5        Sales Revenue     =     ($20,520 ÷ 108%)     =     $19,000
Jan. 5        Sales Taxes Payable     =     ($20,520 – $19,000)     =     $1,520
Jan. 20        Sales Taxes Payable     =     (900 x $50 x 8%)     =     $3,600
Jan. 25        Sales Revenue     =     ($12,420 ÷ 108%)     =     $11,500
Jan. 25        Sales Taxes Payable     =     ($12,420 – $11,500)     =     $920

Journalize the adjusting entry at January 31 for the outstanding note payable. (Hint: Use one-third of a month for the Girard Bank note.)

Explanation
 Interest Payable = ($27,000 x 8% x 1/12) = $180; ($180 x 1/3) = $60

Prepare the current liabilities section of the balance sheet at January 31, 2019. Assume no change in accounts payable.

Explanation
 Sales taxes payable     =     ($1,520 + $3,600 + $920)     =     $6,040
Unearned service revenue     =     ($16,000 – $10,000)     =     $6,000
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