Prepare the current liabilities section of the balance sheet

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On January 1, 2020, the ledger of Waterway Company contains the following liability accounts.

Accounts Payable                  $54,000

Sales Taxes Payable                7,200

Unearned Service Revenue        16,500

During January, the following selected transactions occurred.

Point 1: Jan. 5 Sold merchandise for cash totaling $20,520, which includes 8% sales taxes.

Point 2: 12 Performed services for customers who had made advance payments of $11,000. (Credit Service Revenue.)

Point 3: 14 Paid state revenue department for sales taxes collected in December 2019 ($7,200).

Point 4: 20 Sold 900 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.

Point 5: 21 Borrowed $31,500 from Girard Bank on a 3-month, 8%, $31,500 note.

Point 6: 25 Sold merchandise for cash totaling $9,936, which includes 8% sales taxes.

Question 1: How do I Journalize the January transactions.?

Question 2: 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 7% of sales of the new product.?

Question 3: Prepare the current liabilities section of the balance sheet at January 31, 2020. Assume no change in accounts payable.?

Reference no: EM132474503

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