On January 1, 2022, the ledger of Sunland Company contained these liability accounts. Accounts Payable $55,400 Sales Taxes Payable 9,000 Unearned Service Revenue 15,500 During January, the following selected transactions occurred. Jan. 1 Borrowed $25,200 in cash from Apex Bank on a 3-month, 5%, $25,200 note. 5 Sold merchandise for cash totaling $6,466, which includes 6% sales taxes. 12 Performed services for customers who had made advance payments of $12,000. (Credit Service Revenue.) 14 Paid state treasurer’s department for sales taxes collected in December 2021, $9,000. 20 Sold 700 units of a new product on credit at $48 per unit, plus 6% sales tax. During January, the company’s employees earned wages of $72,000. Withholdings related to these wages were $5,508 for FICA, $5,150 for federal income tax, and $1,550 for state income tax. The company owed no money related to these earnings for federal or state unemployment tax. Assume that wages earned during January will be paid during February. No entry had been recorded for wages or payroll tax expense as of January 31. Prepare the current liabilities section of the balance sheet at January 31, 2022. Assume no change in accounts payable.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2022, the ledger of Sunland Company contained these liability accounts.

Accounts Payable		$55,400
Sales Taxes Payable		9,000
Unearned Service Revenue		15,500

During January, the following selected transactions occurred.

Jan. 1		Borrowed $25,200 in cash from Apex Bank on a 3-month, 5%, $25,200 note.
5		Sold merchandise for cash totaling $6,466, which includes 6% sales taxes.
12		Performed services for customers who had made advance payments of $12,000. (Credit Service Revenue.)
14		Paid state treasurer’s department for sales taxes collected in December 2021, $9,000.
20		Sold 700 units of a new product on credit at $48 per unit, plus 6% sales tax.

During January, the company’s employees earned wages of $72,000. Withholdings related to these wages were $5,508 for FICA, $5,150 for federal income tax, and $1,550 for state income tax. The company owed no money related to these earnings for federal or state unemployment tax. Assume that wages earned during January will be paid during February. No entry had been recorded for wages or payroll tax expense as of January 31.

Prepare the current liabilities section of the balance sheet at January 31, 2022. Assume no change in accounts payable.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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