On January 1, 2014, the ledger of Werth Company contains the following liability accounts.
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Accounts Payable Don't use plagiarized sources. Get Your Custom Essay on
prepare the current liabilities section of the balance sheet at january 31 2014 assu 618503
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$35,000 |
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Sales Taxes Payable |
5,000 |
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Unearned Service Revenue |
12,000 |
During January, the following selected transactions occurred.
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1 |
Borrowed $30,000 in cash from Platteville Bank on a 4-month, 6%, $30,000 note. |
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5 |
Sold merchandise for cash totaling $11,130, which includes 6% sales taxes. |
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12 |
Performed services for customers who had made advance payments of $8,000.(Credit Service Revenue.) |
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14 |
Paid state treasurer”s department for sales taxes collected in December 2013, $5,000. |
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20 |
Sold 750 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. |
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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, 2014. Assume no change in accounts payable.
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