How to Journalize Transactions and Prepare Current Liabilities Section
What are the key transactions that occurred in January for Romada Company?
Explore the borrowing of cash, sales, advance payments, sales taxes, and wages.
Key Transactions in January:
1. Borrowed $18,000 in cash from Apex Bank.
2. Sold merchandise for cash totaling $6,254, including sales taxes.
3. Performed services for customers with advance payments of $10,000.
4. Paid state treasurer's department $6,600 for sales taxes collected in December 2016.
5. Sold 500 units of a new product on credit at $48 per unit, plus 6% sales tax.
6. Employees earned wages of $70,000 in January.
Journalizing the Transactions and Adjusting Entries:
The January transactions for Romada Company involve a variety of financial activities such as borrowing cash, sales, advance payments, sales taxes, and payroll. Each transaction is recorded through journal entries to track the company's financial position accurately.
1. Journalizing the January transactions:
- Borrowed $18,000 in cash:
Cash 18,000
Notes Payable 18,000
- Sold merchandise for cash:
Cash 5,904
Sales Revenue 5,254
Sales Taxes Payable 350
- Performed services with advance payments:
Unearned Service Revenue 10,000
Service Revenue 10,000
- Paid state treasurer's department for sales taxes:
Sales Taxes Payable 6,600
Cash 6,600
- Sold new product on credit:
Accounts Receivable 25,320
Sales Revenue 24,000
Sales Taxes Payable 1,320
- Employees earned wages:
Salaries and Wages Expense 70,000
Various tax payables (details provided)