Piper Company records a year-end entry for $10,000 of previously unrecorded cash sales (costing $5,000) and its sales taxes at a rate of 4%. The company earned $50,000 of $125,000 previously received in advance and originally recorded as unearned services revenue. Prepare any necessary adjusting entries at December 31, 2017, for Piper Company's year-end financial statements for each of the above separate transactions and events. (Piper has the policy of recording cash received in advance in balance sheet accounts.)

Question

Rachel Golden

Business

19 December, 16:01

Piper Company records a year-end entry for $10,000 of previously unrecorded cash sales (costing $5,000) and its sales taxes at a rate of 4%. The company earned $50,000 of $125,000 previously received in advance and originally recorded as unearned services revenue. Prepare any necessary adjusting entries at December 31, 2017, for Piper Company's year-end financial statements for each of the above separate transactions and events. (Piper has the policy of recording cash received in advance in balance sheet accounts.)

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Jacqueline Wang · Answer 1

Cash 10,000

Sales revenue 9,600

Sales tax payable 400

--to record the sale--

COGS 5,000 debit

Inventory 5,000 credit

--to record the sales cost--

b)

unearned revenues 50,000 debit

sales revenues 50,000 credit

Explanation:

a)

we have sales revenue and we also need to recognzie the sales tax payable we need to later give to the state.

we recognize the COGS and inventory used for the sale

b) we recognize for the amount earned thus, decrease the unearned and increase the sales revenue