P11-1B On January 1, 2008, the ledger of Payless Software Company contains the following liability

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P11-1B On January 1, 2008, the ledger of Payless Software Company contains the following liability

accounts.

Accounts Payable                       $42,500

Sales Taxes Payable                   5,800

Unearned Service Revenue        15,000

During January the following selected transactions occurred.

Jan. 1 Borrowed $30,000 in cash from Amsterdam Bank on a 4-month, 8%, $30,000 note.

5 Sold merchandise for cash totaling $10,400, which includes 4% sales taxes.

12 Provided services for customers who had made advance payments of $9,000. (Credit Service Revenue.)

14 Paid state treasurer’s department for sales taxes collected in December 2007, $5,800.

20 Sold 900 units of a new product on credit at $52 per unit, plus 4% sales tax.

25 Sold merchandise for cash totaling $18,720, which includes 4% sales taxes.

Instructions

(a) Journalize the January transactions.

(b) Journalize the adjusting entries at January 31 for the outstanding notes payable.

(c) Prepare the current liabilities section of the balance sheet at January 31, 2008. Assume no

change in accounts payable.