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On January 1, 2022, the ledger of Waterway Company contains these liability accounts. Accounts Payable Sales Taxes Payable Unearned Service Revenue Jan. 5 During January, these selected transactions occurred. 12 14 20 21 $54,000 7,200 25 16,500 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes. Performed services for customers who had made advance payments of $11,000. (Credit Service Revenue) Paid state revenue department for sales taxes collected in December 2021 ($7.200). Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax. This new product is subject to a 1-year warranty. Borrowed $31,500 from Girard Bank on a 3-month, 8 %, $31.500 note. Sold merchandise for cash totaling $9.936, which includes 8% sales taxes.

On January 1, 2022, the ledger of Waterway Company contains these liability accounts. Accounts Payable Sales Taxes Payable Unearned Service Revenue Jan. 5 During January, these selected transactions occurred. 12 14 20 21 $54,000 7,200 25 16,500 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes. Performed services for customers who had made advance payments of $11,000. (Credit Service Revenue) Paid state revenue department for sales taxes collected in December 2021 ($7.200). Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax. This new product is subject to a 1-year warranty. Borrowed $31,500 from Girard Bank on a 3-month, 8 %, $31.500 note. Sold merchandise for cash totaling $9.936, which includes 8% sales taxes.

FINANCIAL ACCOUNTING
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 Waterway Company contains these liability accounts. Accounts Payable Sales Taxes Payable Unearned Service Revenue Jan. 5 12 During January, these selected transactions occurred. 14 20 21 $54,000 25 7,200 16,500 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes. Performed services for customers who had made advance payments of $11,000. (Credit Service Revenue.) Paid state revenue department for sales taxes collected in December 2021 ($7,200). Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax. This new product is subject to a 1-year warranty. Borrowed $31,500 from Girard Bank on a 3-month, 8 %, $31.500 note. Sold merchandise for cash totaling $9,936, which includes 8% sales taxes.
Transcribed Image Text:On January 1, 2022, the ledger of Waterway Company contains these liability accounts. Accounts Payable Sales Taxes Payable Unearned Service Revenue Jan. 5 12 During January, these selected transactions occurred. 14 20 21 $54,000 25 7,200 16,500 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes. Performed services for customers who had made advance payments of $11,000. (Credit Service Revenue.) Paid state revenue department for sales taxes collected in December 2021 ($7,200). Sold 900 units of a new product on credit at $50 per unit, plus 8% sales tax. This new product is subject to a 1-year warranty. Borrowed $31,500 from Girard Bank on a 3-month, 8 %, $31.500 note. Sold merchandise for cash totaling $9,936, which includes 8% sales taxes.
(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 7% of sales of the new product. (Hint: Use one-third of a month for the Girard Bank note) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) No. 1 (C) Date Account Titles and Explanation eTextbook and Media List of Accounts Save for Later Debit Cred Prepare the current liabilities section of the balance sheet at January 31, 2022. Assume no change in accounts payable. Waterway Company Balance Sheet (Partial)
Transcribed Image Text:(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 7% of sales of the new product. (Hint: Use one-third of a month for the Girard Bank note) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) No. 1 (C) Date Account Titles and Explanation eTextbook and Media List of Accounts Save for Later Debit Cred Prepare the current liabilities section of the balance sheet at January 31, 2022. Assume no change in accounts payable. Waterway Company Balance Sheet (Partial)
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