Question

Journalize the transactions in the Smith Pharmacies general journal. Round to the nearest dollar. Explanations are not required.
2.	Prepare the liabilities section of the balance sheet for Smith Pharmacies on March ​1, 2019 after all the journal entries are recorded

Mar. 1		Borrowed $100,000 from Margate Bank. The five​-year, 99​% note requires payments due​ annually, on March 1. Each payment consists of $20,000 principal plus one​ year's interest.
Dec. 1		Mortgaged the warehouse for $300,000 cash with Sandi Bank. The mortgage requires monthly payments of $6,000. The interest rate on the note is 33​% and accrues monthly. The first payment is due on January​ 1, 2019.
31		Recorded interest accrued on the Sandi Bank note.
31		Recorded interest accrued on the Margate Bank note.
20192019
Jan. 1		Paid Sandi Bank monthly mortgage payment.
Feb. 1		Paid Sandi Bank monthly mortgage payment.
Mar. 1		Paid Sandi Bank monthly mortgage payment.
1		Paid first installment on note due to Margate Bank.

Answer 1

A) Journal entries in the books of Smith Pharmacies General.

1. Bank A/c                                                                               Dr.      $100000

            To Margate Bank 99% note A/c                                                                  $100000

(Being $100000 borrowed from bank)

2. Cash A/c                                                                             Dr.     $3,00,000

             To Sandi Bank Loan A/c                                                                            $3,00,000

   (Being warehouse mortgaged with Sandi Bank and cash received)

3. Interest to Sandi Bank A/c                                                  Dr.    $ 8250

             To Sandi Bank Loan A/c                                                                                           $8250

( Being Interest Accrued $300000 * 33% *1/12)

4. Interest to Margarate Bank A/c                                          Dr. $1650

             To interest payable to Margarate Bank A/c                                                                $1650      

( Being interest accrued = $100000*99%= $99000 = $99000/60 = $ 1650

2019

Jan 1. ​Sandi Bank Loan A/c                                                  Dr. $6000

                  To Cash A/c                                                                                    $6000

Jan 31 Interest to Sandi Bank A/c                                         Dr. $ 8312                              

                  To Sandi Bank A/c                                                                         $ 8312

( $300000 - $ 6000 + $8250 = $ 302250, $302250 * 33% * 1/12 = $ 8312)

Feb 1 Sandi Bank Loan A/c                                                 Dr. $6000

                 To Cash A/c                                                                                   $6000

Feb 28th Interest to Sandi Bank A/c                                  Dr. $8375            

                 To Sandi Bank A/c                                                                        $8375

     ($ 302250 - $6000 + $8312 = $ 304562 = $304562 * 33% *1/12 = $ 8375

Mar 1 Sandi Bank Loan A/c                                              Dr. $6000

                To Cash A/c                                                                                  $6000

Mar 1 Interest to Margarate Bank A/c                              Dr. $18150

                To interest payable to Margarate Bank A/c                                                                $18150

( being interest accrued for remaining 11 months = $ 1650 * 11 = $18150)

Mar 1 Margarate Bank Loan A/c                                      Dr. $ 20000

               To Cash                                                                                       $ 20000

   ( being principle paid)

Mar 1 Interest payable to Margarate bank A/c                 Dr. $19800

              To Cash A/c                                                                                 $19800

( being annual interest paid to Bank )

B Extract of Liabilities section of Balance Sheet

​Loan from Banks

Margarate Bank Loan                  $80000

Sandi Bank                                  $282000

Plus : Interest accrued                $24937

Total                                            $386937