Question

#1: Oct. 18th ; Ordered the following inventory on account from Velocity Sporting Goods, using purchase order No. 328 (Doc. No 16).

Description and units:

Basketball pole pad: 120 Basketball bag: 80 Portable inflation pump: 30 Trainer's first aid kit: 75

Price: Basketball pole pad: $94 basketball bag: $26 portable inflaion pump: $30 trainer's first aid kit: $30

Vendor address: 1285 Colgrove Ave., Pierre, SD 57501 Freight carrier: Interstate Motor Freight Freight charges: collect ( i.e., paid by Warren Sports Supply) Allowances: None note: No receiving or recording occurs at this point for this transaction.

Question: What is the journal entry for this transaction? is there any adjusting entry needed for the future month end and year end? if yes, what is the adjusting journal entry should be?

#2: Oct 18th; Borrowed $60,000 from First American Bank and Trust by issuing a two-year note payable with a stated annual interest rate of 5%. Check no 545 for $60,000 was received from the bank and deposited. Reviewed the terms and conditions of the note and signed it (Ray Kramer) as the borrower.

Question: What is the journal entry for this transaction? is there any adjusting entry needed for the future month end and year end? if yes, what is the adjusting journal entry should be?

Answer 1

Journal Entries
Date	Account Name		Debit	Credit
Oct 18	Purchase A/c		16,510
		To Accounts Payable		16,510
(Being the purchase of Basket ball pad 120@94$, Basket ball 80@26$, Portable inflation pump 30@30$ amd Trainer first aid kit 75@30$ from Velocity Sporting Goods)
Year end	Inventory A/c
		To Profit and loss A/c
(Being the transfer of closing stock of inventory)
Oct 18	Cash at Bank A/c		60,000
		To Long term debt		60,000
(Being the entry passed for borrowal of $60000 from First American Bank for 2 years , receipt by Cheque no 545)
Year end	Interest on debt
		To Long term debt
(Being the interest accrued on borrowing calculated at 5%pa)