Liability Entries and Adjustments
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P13-2
Listed below are selected transactions of Shultz Department Store for the current year ending December 31.
1. On December 5, the store received $500 from the Jackson Players as a deposit to be returned after
certain furniture to be used in stage production was returned on January 15.
2. During December, cash sales totaled $798,000, which includes the 5% sales tax that must be remitted
to the state by the fifteenth day of the following month.
3. On December 10, the store purchased for cash three delivery trucks for $120,000. The trucks were purchased in a state
that applies a 5% sales tax.
4. The store determined it will cost $100,000 to restore the area surrounding one of its store parking
lots, when the store is closed in 2 years. Shultz estimates the fair value of the obligation at
December 31 is $84,000.
Instructions
Prepare all the journal entries necessary to record the transactions noted above as they occurred and any
adjusting journal entries relative to the transactions that would be required to present fair financial statements
at December 31. Date each entry. For simplicity, assume that adjusting entries are recorded only
once a year on December 31.
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Solution Summary
The solution explains the journal entries to record the transactions and the related adjusting entries
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