On January 1 2014 the ledger of Shumway Company contains the following liability accounts.
Accounts Payable
52000
Sales Taxes Payable
5800
Unearned Service Revenue
14000
During January the following selected transactions occurred.
Jan. 5 Sold merchandise for cash totaling $22470 which includes 7% sales taxes.
12 Provided services for customers who had made advance payments of $10000. (Credit Service Revenue.)
14 Paid state revenue department for sales taxes collected in December 2013 ($5800).
20 Sold 600 units of a new product on credit at $50 per unit plus 7% sales tax.
21 Borrowed $14000 from DeKalb Bank on a 3-month 8% $14000 note.
25 Sold merchandise for cash totaling $12947 which includes 7% sales taxes.
Instructions:
a. Journalize the January transactions. (Round answers to 0 decimal places e.g. 125. Credit account titles are automatically indented when amount is
entered. Do not indent manually.)
b. Journalize the adjusting entries at January 31 for the outstanding notes payable. (Hint: Use one-third of a month for the DeKalb Bank note.) (Round
answers to 0 decimal places e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
c. Prepare the current liabilities section of the balance sheet at January 31 2014. Assume no change in accounts payable. (Round answers to 0 decimal
places e.g. 125.)