Explore BrainMass

Explore BrainMass

    Blanton Dept Store Liabilities: Sales tax reserves current

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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.

    © BrainMass Inc. brainmass.com June 4, 2020, 4:37 am ad1c9bdddf

    Solution Summary

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