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Blanton Dept Store Liabilities: Sales tax reserves current

Blanton Dept Store Liabilities: Sales taxes, reserves, current vs long term

The trial balance indicates:

Cash $50,000
Accounts receivable 142,500
Accounts payable 98,500
Prepaid advertising $40,000
Short-term notes payable 250,000
Mortgage note payable 1,000,000
Retained earnings $500,000

Blanton Department Store also had the following as of the fiscal year end, December 31, 2013:

1. On December 5, the store received a deposit from a customer on a custom order to be shipping in January. The deposit is refundable.
2. During December, cash sales totaled $798,000. The total includes 5% sales tax due to the state of MN by the fifteenth of the following month.
3. On December 10, the store purchased three delivery trucks for $120,000 cash. A 5% sales tax applies to this purchase.
4. Blanton determined it will cost $100,000 to restore the area of its store parking lots, when the store is closed in 2 years, as stipulated in their lease agreement. Blanton estimates the fair value of the obligation at December 31 is $84,000.

Show the journal entries needed to record the transaction and prepare a classified liability section of the 12/31/2013 balance sheet.

Solution Summary

Your tutorial shows the liabilities accounts and what impacts them, a partial balance sheet and the journal entries along with instructional notes.