Accounting Transactions in January 2017: Oriole Company
How can we journalize the given transactions?
Let's breakdown the transactions and journalize them accordingly:
- What happened on January 1?
- What was the transaction on January 5?
- How about January 12?
- Any significant event on January 14?
- And what occurred on January 20?
- What do we need to consider regarding employee wages for January?
Journalizing the Transactions
To journalize the given transactions, we need to record each transaction in the general journal using appropriate accounts and amounts.
Here are the journal entries for the provided transactions:
Jan. 1:
Cash 18,000
Notes Payable 18,000
(To record borrowing $18,000 from Apex Bank on a 4-month, 5%, $18,000 note)
Jan. 5:
Cash 5,600
Sales Revenue 5,600
Sales Taxes Payable 336
(To record the sale of merchandise for cash, including sales taxes)
Jan. 12:
Cash 11,700
Unearned Service Revenue 11,700
(To record services performed for customers who had made advance payments)
Jan. 14:
Sales Taxes Payable 7,400
Cash 7,400
(To record the payment of sales taxes to the state treasurer's department)
Jan. 20:
Accounts Receivable 33,000
Sales Revenue 31,000
Sales Taxes Payable 2,000
(To record the sale of 660 units of a new product on credit, including sales taxes)
Jan. 31:
Wages Expense 73,200
Social Security and Medicare Taxes Payable 5,600
Federal Income Tax Payable 5,229
State Income Tax Payable 1,569
Cash 60,802
(To record the wages earned by employees and withholdings)
Note: The wages and payroll tax expense are recorded at the end of the month, even though they will be paid in February.
These are the journal entries for the given transactions. Remember to consult with an accounting professional or refer to your textbook/instructor for specific instructions and requirements related to your course or accounting system.
Reflecting on the accounting transactions of Oriole Company in January 2017, it is crucial to understand the significance of accurately journalizing each event. Journalizing transactions helps maintain proper records of financial activities, ensuring transparency and compliance with accounting principles.
On January 1, the company borrowed $18,000 in cash from Apex Bank, initiating a note payable transaction. This step reflects the company's financing activities and the need to document liabilities accurately.
Subsequently, on January 5, Oriole Company made sales, including a 6% sales tax component. Journalizing this transaction involves crediting sales revenue and debiting cash and sales taxes payable, demonstrating the revenue generation process.
January 12 marked the performance of services for customers who had made advance payments. This required adjusting the unearned service revenue account to recognize earned revenue appropriately.
On January 14, the company paid state sales taxes collected in December 2016, showcasing compliance with tax obligations. This transaction impacts the liability side of the balance sheet.
The sale of new products on credit on January 20 added to accounts receivable and sales revenue, reflecting income generation for the company. The sales tax payable account also needed adjustment for the tax component.
Lastly, addressing employee wages for January is crucial, considering the withholdings for Social Security, federal income tax, and state income tax. Proper journal entries for wages and withholding taxes ensure accurate reporting and future payment planning.
Overall, journalizing these transactions provides a comprehensive view of Oriole Company's financial activities in January 2017. It aids in financial analysis, budgeting, and decision-making processes, fostering a clear understanding of the company's financial health.