Question

In: Accounting

The following transactions occurred: Purchased equipment at a cost of $10,200 on May. 1, signing a...

The following transactions occurred:

Purchased equipment at a cost of $10,200 on May. 1, signing a nine month 6.6% note payable for that amount.

Recorded a week’s sales of $36,000 on Feb. 14, two thirds on credit and one-third for cash. Sales are subject to 6 ½% sales tax.

Accrued monthly warranty expense, which is estimated at 1.2% on sales in #2.

Sent last week’s sales tax to the state, Feb. 19.

Sold 2 year service contracts on copiers for $70,000 on Feb. 28. Each month the company services the copiers. Give the journal entry for the sale of the service copiers and any adjustment journal entry on Dec. 31. (Ignore cost to service copiers).

Paid the nine month note, plus interest, at maturity, Nov. 1. See #1.

Mar. 1, the company is a party to a patent infringement lawsuit of $230,000. Their attorney is certain that the company will lose the lawsuit. Estimated cost will be $200,000.

Mar. 15, the company is party to a lawsuit for company violations of $90,000. The company attorney advises that it is a remote possibility that the company will lose this lawsuit. The attorney estimates the amount at $80,000, if they do.

Dec. 31, oil is spilled in the parking lot and is an environmental hazard which will need to be cleaned by a Hazmat team. It is certain this will need to be remediated. The company does not know how much it will cost.

Journalize the required transactions. If no journal entry is required, say “no journal entry.”

	Date	Account	Dr.	Cr.
1

2



3

4

5



6


7

8

9

Expert Solution

Answer: Giving the journal entries for the each point as required.

Working Note for various calculation:

1) Interest on Note Payable 10200*.065*9/12 = 504.90

2) Tax Account 36000*6.5% = 2340 again divided in cash and credit sales on ratio of 1:3 which is 780 and 1560.

Hence find the format of various journal entires in self explaintory format.

ekkarill92 answered 2 years ago

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