On Januarj I. 2006, the ledger of Shumway Softwan Company contains the following liability accounts.

During January the following selected transactions occurred.
.Ian. I Borrowed $15,000 in cash from Amsterdam Rank on a 4-month, 8%, $15,000 note.
ild merchandise for cash totaling $10,400. which includes 4% sales taxes.
I ! Provided services foi customers who had made advance payments of $9,000. (Credit Sen iee Revenue.)
l 1 Paid state treasurer's department foi sales taxes collected in December 2005. $5,800.
JO Sold 700 uniis ol a new product on credit at $52 per unit, plus 4"„ sales tax.
>5 sold merchandise foi cash totaling $12,480, which includes 4"„ sales taxes.

Instructions

(a) Journalize the January transactions.

(b) Journalize the adjusting entry at January 31 for the outstanding notes payable.

(c) Prepare the current liabilities section of the balance sheet at January 31, 2006. Assume no change in accounts payable.

Transcribed Image Text:

Accounts Payable $42,500 Sales Taxes Payable 5.800 Unearned Service Revenue 15,000