On January 1, 2024, the ledger of Edmiston Software Company contains the following liability accounts: Accounts Payable
Question:
On January 1, 2024, the ledger of Edmiston Software Company contains the following liability accounts:
Accounts Payable ..................................... $42,500
GST Payable ................................................5,800
Unearned Revenue ...................................15,000
During January, the following selected transactions occurred.
Jan. 1 Borrowed $30,000 in cash from Canada Bank on a four-month, 8%, $30,000 note.
5 Sold merchandise for cash totaling $10,400, plus GST of 5% and PST 7%. Ignore any cost of goods sold entry.
12 Provided services for customers who had made advance payments of $9,000. The payment included GST of $402 and PST of $562.
14 Paid the Receiver General GST invoiced in December 2023 of $5,800.
20 Sold 900 units of a new product on credit at $52 per unit, plus GST of 5% and PST 7%. This new product is subject to a one-year warranty.
25 Sold merchandise for cash totalling $18,720, plus GST of 5% and PST 7%.
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, assuming warranty costs are expected to equal 5% of sales of the new product.
c. Prepare the current liabilities section of the balance sheet at January 31, 2024. Assume no change in accounts payable.
James, an employee of Edmiston Software Company, believes payroll taxes withheld are an expense to his employer. Is James correct? Explain.
Step by Step Answer:
Accounting Principles Volume 2
ISBN: 9781119786634
9th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak