Question

Warren Plastic, LLC complete these transactions in year 1 and year 2. Give general journal entries for them.

date yr
2/20 1 Purchased equipment for 40,000, signed an 8-month note, 7%.

2/28 1 Recorded the month's sales of 200,000, one-eighth cash, seven-eighths credit.
Sales tax rate is 5.25%

3/20 1 Sent Feb. sales tax to the state.

4/30 1 Borrowed $255,000 on a long-term note, 7% note payable
Annual interest is to be paid each year on 4-30, starting yr. 2.

10/20 1 paid off the note dated 2-20-yr 1

11/30 1 bought inventory at a cost of 12,500. Signed a 3 month 3.25% note.

12/31 1 Accrued warranty expense, estimated at 2% of 2,400,000 of sales

12/31 1 Accrued Interest on ALL outstanding notes.

2/28 2 Paid off the inventory note at maturity, including interest.

4/30 2 Paid the annual interest on the 255,000 note.

Answer 1

The entries are as follows:

Note: Account tiltles nomenclature may vary.

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