In: Accounting
The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year:
Feb. 15. | Purchased merchandise on account from Hood Co., $144,000, terms n/30. |
Mar. 17. | Issued a 60-day, 6% note for $144,000 to Hood Co., on account. |
May 16. | Paid Hood Co. the amount owed on the note of March 17. |
June 15. | Borrowed $140,400 from Acme Bank, issuing a 60-day, 7% note. |
July 21. | Purchased tools by issuing a $117,000, 90-day note to Columbia Supply Co., which discounted the note at the rate of 9%. |
Aug. 14. | Paid Acme Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $140,400. (Journalize both the debit and credit to the notes payable account.) |
Oct. 13. | Paid Acme Bank the amount due on the note of August 14. |
Oct. 19. | Paid Columbia Supply Co. the amount due on the note of July 21. |
Dec. 1. | Purchased office equipment from Mountain Equipment Co. for $132,000, paying $22,000 and issuing a series of ten 6% notes for $11,000 each, coming due at 30-day intervals. |
Dec. 12. | Settled a product liability lawsuit with a customer for $83,000, payable in January. Emerald Bay accrued the loss in a litigation claims payable account. |
Dec. 31. | Paid the amount due Mountain Equipment Co. on the first note in the series issued on December 1. |
Required:
1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place. Don't round the intermediate calculations.
For a compound transaction, accounts should be listed largest to smallest.
Transaction | General Journal | Debit | Credit |
Feb-15 | Inventory | $ 1,44,000 | |
Accounts Payable - Hood Co. | $ 1,44,000 | ||
(Being Purchase recorded) | |||
Mar-14 | Accounts Payable - Hood Co. | $ 1,44,000 | |
Notes Payable | $ 1,44,000 | ||
(Being Issuance of notes payable recorded) | |||
May-16 | Notes Payable | $ 1,44,000 | |
Interest Expense [($1,44,000 X 6%) X 60/360] | $ 1,440 | ||
Cash | $ 1,45,440 | ||
(Being payment recorded) | |||
Jun-15 | Cash | $ 1,40,400 | |
Notes Payable | $ 1,40,400 | ||
(Being borrowed amount recorded) | |||
Jul-21 | Tools | $ 1,17,000 | |
Interest Expense [($1,17,000 X 9%) X 90/360] | $ 2,632.5 | ||
Cash | $ 1,19,632.5 | ||
(Being Purchase recorded) | |||
Aug-14 | Notes Payable | $ 1,40,400 | |
Interest Expense [($1,40,400 X 7%) X 60/360] | $ 1,638 | ||
Notes Payable | $ 1,40,400 | ||
Cash | $ 1,638 | ||
(Being payment of interest expense recorded) | |||
Oct-13 | Notes Payable | $ 1,40,400 | |
Interest Expense [($1,40,400 X 10%) X 60/360] | $ 2,340 | ||
Cash | $ 1,42,740 | ||
(Being payment recorded) | |||
Oct-19 | Notes Payable | $ 1,17,000 | |
Cash | $ 1,17,000 | ||
(Being payment recorded) | |||
Dec-01 | Office Equipment | $ 1,32,000 | |
Notes Payable | $ 22,000 | ||
Cash | $ 1,10,000 | ||
(Being Office equipment purchased) | |||
Dec-12 | Litigation loss | $ 83,000 | |
Litigation claims payable | $ 83,000 | ||
(Being Settlement of lawsuit recorded) | |||
Dec-31 | Notes Payable | $ 11,000 | |
Interest Expense [($11,000 X 6%) X 30/360] | $ 55 | ||
Cash | $ 11,055 | ||
(Being payment recorded) |