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On January 1 2017 the ledger of Shum way Ltd contains the following liability accounts Accounts Payable £52000 Sales Taxes Payable

On January 1, 2017, the ledger of Shum way Ltd. contains the following liability accounts. Accounts Payable .......................... £52,000 Sales Taxes Payable ....................... 5,800 Unearned Service Revenue ............... 13,000 During January, the following selected transactions occurred. Jan. 5 Sold merchandise for cash totaling £22,470, which includes 7% sales taxes. 12 Performed services for customers who had made advance payments of £10,000. (Credit Service Revenue.) 14 Paid revenue department for sales taxes collected in December 2016 (£5,800). 20 Sold 700 units of a new product on credit at £52 per unit, plus 7% sales tax. 21 Borrowed £14,000 from DeKalb Bank on a 3-month, 6%, £14,000 note. 25 Sold merchandise for cash totaling £12,947, which includes 7% sales taxes. Instructions (a) Journalize the January transactions. (b) Journalize the adjusting entries at January 31 for the outstanding notes payable. (Hint: Use one-third of a month for the DeKalb Bank note.) (c) Prepare the current liabilities section of the statement of fi nancial position at January 31, 2017. Assume no change in accounts payable.

Apr 22 2020 View more View Less

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