Reference no: EM13990830
The following is a list of liability accounts on the ledger of Caravan Inc. on January 1 :
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Sales Tax Payable
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$7,500
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Accounts Payable
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9,500
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Unearned Revenue
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16,500
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The following transactions occurred during the month of January:
Jan. 1 Borrowed $25,000 from Atlanta Bank on a 6-month, 6% note.
9 Provided service for customers who had paid $6,000 in advance.
15 Paid state treasurer for sales taxes collected in December, 57,500. 18 Bought inventory on credit for $1 2,000.
23 Sold goods on credit for $3,000, plus 7% sales tax.
The employees of the Chop House earned gross salaries of $45,000 during January. The company complied with the law regarding employees' withholdings and employer matching. Withholdings were 6.2% for Social Security tax, 1.45% for Medicare tax, $3,058 for federal income tax, and $1,900 for state income tax. Salaries earned in January will be paid during February.
Required:
a. Prepare journal entries for the January transactions.
b. Prepare adjusting entries at January 31 for the salaries expense, payroll tax expense, and notes payable.
Irons Incorporated entered into the following stock transactions during the year.
Apr. 5-Issued 30,000 shares of common stock with $3 par value for $180,000. May 31-Purchased 1,000 shares of treasury stock for $50,000.
Oct. 1-Issued 3,000 shares of preferred stock with $40 par value for $65 per share.
Required
Prepare the journal entries to record the transactions. Use the cost rnethod to account for the purchase of treasury stock.
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