On January 2006. the ledger of Zaur Company contains the following liability accounts.

During January the following selected transactions occurred.
Jan. 5 Sold merchandise for cash totaling $17,280. which includes 8% sales taxes.
12 Provided services for customers who had made advance payments of $10,000. (Credit Service Revenue.)
14 Paid state revenue department for sales taxes collected in December 2005 ($7,700).
20 Sold 600 units of a new product on credit at $50 per unit, plus 8% sales tax.
21 Borrowed $18,000 from UCLA Bank on a 3-month. 9%, $18,000 note.
25 Sold merchandise for cash totaling $12,420. which includes 8% sales taxes.
Instructions

(a) Journalize the January transactions.

(b) Journalize the adjusting entry at January 31 for the outstanding notes payable. (Hint: Use one-third of a month for the UCLA Bank note.)

(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 $52,000 Sales Taxes Payable 7.700 Unearned Service Revenue 16,000