PROBLEMS: SET C
On January 1, 2010, the ledger of Painless Software Company contains the following
Sales Taxes Payable
Unearned Service Revenue
During January the following selected transactions occurred.
Borrowed $30,000 in cash from Amsterdam Bank on a 4-month, 8%, $30,000 note.
Sold merchandise for cash totaling $10,400, which includes 4% sales taxes.
Provided services for customers who had made advance payments of $9,000. (Credit
Paid state treasurer’s department for sales taxes collected in December 2009, $5,800.
Sold 900 units of a new product on credit at $52 per unit, plus 4% sales tax. This new
product is subject to a 1-year warranty.
Sold merchandise for cash totaling $18,720, which includes 4% sales taxes.
Journalize the January transactions.
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 5% of sales of the
Prepare the current liabilities section of the balance sheet at January 31, 2010. Assume no
change in accounts payable.
The following are selected transactions of Glazer Company. Glazer prepares financial
Purchased merchandise on account from Alicea Company, $18,000, terms 2/10, n/30.
Issued a 10%, 2-month, $18,000 note to Alicea in payment of account.
Accrued interest for 2 months on Alicea note.