1. Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. 2. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. 3. Paid $62,000 cash for other operating expenses during the year. 4. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. 5. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: 1. Pald the balance of the sales tax due for Year 1. 2. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. 3. Repaid the principal of the note and applicable interest on April 1, Year 2. 4. Paid $102,500 of other operating expenses during the year. 5. Paid the sales tax due on $185,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3.
1. Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. 2. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. 3. Paid $62,000 cash for other operating expenses during the year. 4. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. 5. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: 1. Pald the balance of the sales tax due for Year 1. 2. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. 3. Repaid the principal of the note and applicable interest on April 1, Year 2. 4. Paid $102,500 of other operating expenses during the year. 5. Paid the sales tax due on $185,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3.
Chapter4: Gross Income: Concepts And Inclusions
Section: Chapter Questions
Problem 21CE
Related questions
Question
Do not give solution in image
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning