Question

Described below are certain transactions of Pharoah Company for 2021: 1. On May 10, the company purchased goods from Fox Company for $74,900, terms 2/10, n/30. Purchases and accounts payable are recorded at net amounts. The invoice was paid on May 18. 2. On June 1, the company purchased equipment for $96,000 from Rao Company, paying $31,200 in cash and giving a one-year, 9% note for the balance. 3. On September 30, the company discounted at 11% its $220,000, one-year zero-interest-bearing note at Virginia State Bank, receiving $198,000.

Prepare the journal entries necessary to record the transactions above using appropriate dates. Company uses the periodic inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit May 10May 18June 1September 30 May 10May 18June 1September 30 May 10May 18June 1September 30 May 10May 18June 1September 30 SHOW LIST OF ACCOUNTS

Prepare the adjusting entries necessary at December 31, 2021 in order to properly report interest expense related to the above transactions. Assume straight-line amortization of discounts. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 (To record interest expense) Dec. 31 (To record amortization of discount) SHOW LIST OF ACCOUNTS

Indicate the manner in which the above transactions should be reflected in the Current Liabilities section of Pharoah Company's December 31, 2021 balance sheet. Current Liabilities     Interest Receivable    Note Payable—Rao Company    Discount on Note    Interest Payable    Premium on Note     $     Note Payable—Rao Company    Interest Payable    Interest Receivable    Discount on Note    Premium on Note         Discount on Note    Interest Receivable    Premium on Note    Interest Payable    Note Payable—Virgina State Bank     $     Add    Less     : Note Payable—Virgina State BankPremium on NoteNote Payable—Rao CompanyInterest PayableDiscount on Note $

Answer 1

Journal Enry
Date	Account Tittle	Debit	Credit
10-May	Inventory	$73,402.00
	Accoutn Payable (749000*.98)		$73,402.00
18-May	Account Payable	$73,402.00
	Cash		$73,402.00
1-Jun	Equipment	$96,000.00
	Cash		$31,200.00
	Notes Payable		$64,800.00
30-Sep	Cash	$198,000.00
	Discount on Note Payable	$22,000.00
	Notes Payable		$220,000.00

Adjusting Journal Entry
Date	Account Tittle	Debit	Credit
$44,196.00	Interest Expense (64800*9%*7/12)	$3,402.00
	Interest Payable		$3,402.00
	Interest Expense (22000*3/12)	$5,500.00
	Discount on Note Payable		$5,500.00

Balance Sheet- Pharoah Company
Current Liabilities
Interest Payable	$3,402.00
9% Note Payable	$64,800.00
Zero Interesst Note Payable (220000-5500)	$214,500.00
Total Current Laibilities	$282,702.00