Sturgis Company completed the following transactions during Year 1. Sturgiss fiscal year ends on December 31.
January 15 Recorded tax expense for the year in the amount of $142,000. The tax liability owed to the IRS this year was $96,400. Any deferred tax liability is a current liability. January 31 Paid previously accrued interest expense in the amount of $55,400. April 30 Borrowed $584,000 from Commerce Bank; signed a 12-month, 12% annual interest-bearing note for the money. June 3 Purchased merchandise for resale on account. The invoice amount was $79,220. July 5 Paid June 3 invoice in full. August 31 Signed contract to provide security service to a small apartment complex and collected six months fees in advance amounting to $17,100. December 31 Reclassified a long-term liability in the amount of $134,000 as a current liability. December 31 Determined salary and wages of $88,400 earned but not yet paid December 31 (disregard payroll taxes).
Required:
Prepare journal entries for each of these transactions. Prepare the adjusting entries required on December 31. Show how all of the liabilities arising from these transactions are reported on the balance sheet at December 31. For each transaction, state whether operating cash flows increase, decrease, or are not affected.
Sturgis Company completed the following transactions during Year 1 . Sturgis's fiscal year ends on December 31. January 15 Recorded tax expense for the year in the amount of $142,000. The tax liability owed to the IRS this year was $96,400. Any deferred tax liability is a current liability. January 31 Paid previously accrued interest expense in the amount of $55,400. April 30 Borrowed $584,000 from Commerce Bank; signed a 12-month, 12\% annual interest-bearing note for the money. June 3 Purchased merchandise for resale on account. The invoice amount was $79,220. July 5 Paid June 3 invoice in full. August 31 Signed contract to provide security service to a small apartment complex and collected six months' fees in advance amounting to $17,100. December 31 Reclassified a long-term liability in the amount of $134,000 as a current liability. December 31 Determined salary and wages of $88,400 earned but not yet paid December 31 (disregard payroll taxes). Required: 1. Prepare journal entries for each of these transactions. 2. Prepare the adjusting entries required on December 31. 3. Show how all of the liabilities arising from these transactions are reported on the balance sheet at December 31. 4. For each transaction, state whether operating cash flows increase, decrease, or are not affected. Prepare journal entries for each of these transactions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Adjusting entries will be recorded in Part 2. Prepare the adjusting entries required on December 31 . Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Show Required 1 che liabilities arising from these transactions are reported on the balance sheet at December 31. Eor each transaction, state whether operating cash flows increase, decrease, or are not affected. Note: Select "No effect" if there is no effect. Sturgis Company completed the following transactions during Year 1 . Sturgis's fiscal year ends on December 31. January 15 Recorded tax expense for the year in the amount of $142,000. The tax liability owed to the IRS this year was $96,400. Any deferred tax liability is a current liability. January 31 Paid previously accrued interest expense in the amount of $55,400. April 30 Borrowed $584,000 from Commerce Bank; signed a 12-month, 12\% annual interest-bearing note for the money. June 3 Purchased merchandise for resale on account. The invoice amount was $79,220. July 5 Paid June 3 invoice in full. August 31 Signed contract to provide security service to a small apartment complex and collected six months' fees in advance amounting to $17,100. December 31 Reclassified a long-term liability in the amount of $134,000 as a current liability. December 31 Determined salary and wages of $88,400 earned but not yet paid December 31 (disregard payroll taxes). Required: 1. Prepare journal entries for each of these transactions. 2. Prepare the adjusting entries required on December 31. 3. Show how all of the liabilities arising from these transactions are reported on the balance sheet at December 31. 4. For each transaction, state whether operating cash flows increase, decrease, or are not affected. Prepare journal entries for each of these transactions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Adjusting entries will be recorded in Part 2. Prepare the adjusting entries required on December 31 . Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Show Required 1 che liabilities arising from these transactions are reported on the balance sheet at December 31. Eor each transaction, state whether operating cash flows increase, decrease, or are not affected. Note: Select "No effect" if there is no effect
