Financial Accounting 363 (II)

P2-1A On January 1, 2002, the ledger of Van Manen Company contains the
following liability

accounts.

During January the following selected transactions occurred.

Jan. 5 Sold merchandise for cash totaling $16,632, which includes 8%
sales taxes.

12 Provided services for customers who had made advance payments of

$9,000. (Credit Service Revenue)

14 Paid state revenue department for sales taxes collected in December
2001

($7,500).

20 Sold 500 units of a new product on credit at $50 per unit, plus 8%
sales

tax.

21 Borrowed $18,000 from Castle Bank on a 3-month, 10%, $18,000 note.

25 Sold merchandise for cash totaling $11,340, which includes 8% sales
taxes.

Instructions

(a) Journalize the January transactions.

(b) Journalize the adjusting entry at January 31 for the outstanding
notes payable.

(c) Prepare the current liabilities section of the balance sheet at
January 31, 2002. Assume no

change in accounts payable.

Accounts Payable $52,000

Sales Taxes Payable 7,500

Unearned Service Revenue 16,000