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In: Accounting

The January 1, Year 1 trial balance for the Wright Company is found on the trial...

The January 1, Year 1 trial balance for the Wright Company is found on the trial balance tab. The beginning balances are assumed.

Clark Co. entered into the following transactions involving short-term liabilities. (Use 360 days a year.)

Year 1
Apr. 20 Purchased $49,250 of merchandise on credit from Walsh, terms n/30.
May 19 Replaced the April 20 account payable to Walsh with a 90-day, 14%, $37,000 note payable along with paying $12,250 in cash.
July 8 Borrowed $99,000 cash from NJR Bank by signing a 120-day, 9%, $99,000 note payable.
Aug. 17 Paid the amount due on the note to Walsh at the maturity date.
Nov. 5 Paid the amount due on the note to NJR Bank at the maturity date.
Nov. 28 Borrowed $57,000 cash from Fargo Bank by signing a 60-day, 8%, $57,000 note payable.
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Year 2
Jan. 27 Paid the amount due on the note to Fargo Bank at the maturity date.

General Journal tab - Prepare the Year 1 journal entries related to the notes and accounts payable of Clark Co.

Calculation of interest tab - Use the interest formula (P x R x T) to verify the amount of interest recorded in your entries. Verify that total interest expense agrees with the trial balance.

Year 2 payment tab - Prepare the January 27, Year 2 entry to record the repayment of the note at maturity.

  • Apr. 20. Purchased $49,250 of merchandise on credit from Walsh, terms n∕30. Clark uses the perpetual inventory system.

Note: Enter debits before credits.
Date Account Title Debit Credit
Apr 20
  • Apr. 20. Purchased $49,250 of merchandise on credit from Walsh, terms n∕30. Clark uses the perpetual inventory system.

Note: Enter debits before credits.
Date Account Title Debit Credit
Apr 20
  • Jul. 8. Borrowed $99,000 cash from NJR Bank by signing a 120-day, 9% interest-bearing note with a face value of $99,000.

Note: Enter debits before credits.
Date Account Title Debit Credit
Jul 08
  • Jul. 8. Borrowed $99,000 cash from NJR Bank by signing a 120-day, 9% interest-bearing note with a face value of $99,000.

Note: Enter debits before credits.
Date Account Title Debit Credit
Jul 08
  • Jul. 8. Borrowed $99,000 cash from NJR Bank by signing a 120-day, 9% interest-bearing note with a face value of $99,000.

Note: Enter debits before credits.
Date Account Title Debit Credit
Jul 08
  • Nov. 28. Borrowed $57,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $57,000.

Note: Enter debits before credits.
Date Account Title Debit Credit
Nov 28
  • Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.

Note: Enter debits before credits.
Date Account Title Debit Credit
Dec 31

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Expert Solution

ekkarill92 answered 2 years ago
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