On January 1, 2017, the ledger of Shum way Ltd. contains the following liability accounts.
Accounts Payable .......................... £52,000
Sales Taxes Payable ....................... 5,800
Unearned Service Revenue ............... 13,000
During January, the following selected transactions occurred.
Jan. 5 Sold merchandise for cash totaling £22,470, which includes 7% sales taxes.
12 Performed services for customers who had made advance payments of £10,000. (Credit Service Revenue.)
14 Paid revenue department for sales taxes collected in December 2016 (£5,800).
20 Sold 700 units of a new product on credit at £52 per unit, plus 7% sales tax.
21 Borrowed £14,000 from DeKalb Bank on a 3-month, 6%, £14,000 note.
25 Sold merchandise for cash totaling £12,947, which includes 7% sales taxes.
Instructions
(a) Journalize the January transactions.
(b) Journalize the adjusting entries at January 31 for the outstanding notes payable. (Hint: Use one-third of a month for the DeKalb Bank note.)
(c) Prepare the current liabilities section of the statement of fi nancial position at January 31, 2017. Assume no change in accounts payable.