10 Nov On January 1, 2010, the ledger of Software Company
On January 1, 2010, the ledger of Software Company contains the following liability accounts. Accounts Payable $30,000 Sales Taxes Payable 5,000 Unearned Service Revenue 12,000During 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 2009, $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 section of the balance sheet at January 31, 2010. Assume no change in accounts payable.
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