Q3 On January 1, 2012, the ledger of Montoya Company contains the following liability accounts.

Accounts Payable $52,000

Sales Taxes Payable 7,700

Unearned Service Revenue 16,000

During January, the following selected transactions occurred.

Jan. 5 Sold merchandise for cash totaling $22,680, 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 2011 ($7,700).

20 Sold 800 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 $18,000 from DeKalb Bank on a 3-month, 8%, $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 entries at January 31 for

(1) the outstanding notes payable, and

(2) estimated warranty liability,