On January 1, 2014, the ledger of Shumway Company contains the following liability accounts.

Accounts Payable $52,000 Sales Taxes Payable 5,800 Unearned Service Revenue 14,000 During January, the following selected transactions occurred.

Jan. 5 Sold merchandise for cash totaling $22,470, which includes 7% 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 2013

($5,800).

20 Sold 600 units of a new product on credit at $50 per unit, plus 7% sales tax.

21 Borrowed $14,000 from DeKalb Bank on a 3-month, 8%, $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 balance sheet at January 31, 2014. Assume no change in accounts payable.