Question

On January 1, 2020, the ledger of Sunland Company contains the following liability accounts.

Accounts Payable $53,500
Sales Taxes Payable 7,200
Unearned Service Revenue 16,500

During January, the following selected transactions occurred.

Jan. 5 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes.
12 Performed services for customers who had made advance payments of $10,500. (Credit Service Revenue.)
14 Paid state revenue department for sales taxes collected in December 2019 ($7,200).
20 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.
21 Borrowed $27,000 from Girard Bank on a 3-month, 8%, $27,000 note.
25 Sold merchandise for cash totaling $7,884, which includes 8% sales taxes.

Required:
Journalize the January transactions.

Answer 1

Jan. 5 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes.

Dr Cash 20,520

Cr Sales revenue 19,000

Cr Sales taxes payable 1,520

12 Performed services for customers who had made advance payments of $10,500. (Credit Service Revenue.)

Dr Unearned revenue 10,500

Cr Service revenue 10,500

14 Paid state revenue department for sales taxes collected in December 2019 ($7,200).

Dr Sales taxes payable 7,200

Cr Cash 7,200

20 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.

Dr Cash 48,600

Cr Sales revenue 45,000

Cr Sales taxes payable 3,600

*An additional entry for recording warranty liability must be made but we are not given any estimated warranty costs.

21 Borrowed $27,000 from Girard Bank on a 3-month, 8%, $27,000 note.

Dr Cash 27,000

Cr Notes payable 27,000

25 Sold merchandise for cash totaling $7,884, which includes 8% sales taxes.

Dr Cash 7,884

Cr Sales revenue 7,300

Cr Sales taxes payable 584