1. Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. 2. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. 3. Paid $62,000 cash for other operating expenses during the year. 4. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. 5. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: 1. Pald the balance of the sales tax due for Year 1. 2. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. 3. Repaid the principal of the note and applicable interest on April 1, Year 2. 4. Paid $102,500 of other operating expenses during the year. 5. Paid the sales tax due on $185,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3.
1. Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. 2. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. 3. Paid $62,000 cash for other operating expenses during the year. 4. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. 5. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: 1. Pald the balance of the sales tax due for Year 1. 2. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. 3. Repaid the principal of the note and applicable interest on April 1, Year 2. 4. Paid $102,500 of other operating expenses during the year. 5. Paid the sales tax due on $185,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1. Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The
note was made on April 1, Year 1.
2. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate
of 6 percent.
3. Paid $62,000 cash for other operating expenses during the year.
4. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not
due until Year 2.
5. Recognized the accrued interest at December 31, Year 1.
The following transactions apply to Walnut Enterprises for Year 2:
1. Paid the balance of the sales tax due for Year 1.
2. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate
of 6 percent.
3. Repaid the principal of the note and applicable interest on April 1, Year 2.
4. Paid $102,500 of other operating expenses during the year.
5. Paid the sales tax due on $185,000 of the service revenue. The sales tax on the balance of the revenue is not due until
Year 3.
b. Post the transactions to T-accounts.
Beginning Balance
Balance Before Closing
Cash
Sales Tax Payable
Beginning Balance
Balance Before Closing
Interest Payable
Notes Payable
Beginning Balance
Beginning Balance
Balance Before Closing
Balance Before Closing
Service Revenue
Operating Expenses
Beginning Balance
Beginning Balance
Balance Before Closing
Balance Before Closing
Interest Expense
Beginning Balance
Balance Before Closing
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