In: Accounting
Liability Transactions
The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year:
Feb. 15. | Purchased merchandise on account from Hood Co., $144,000, terms n/30. |
Mar. 17. | Issued a 60-day, 6% note for $144,000 to Hood Co., on account. |
May 16. | Paid Hood Co. the amount owed on the note of March 17. |
June 15. | Borrowed $172,800 from Acme Bank, issuing a 60-day, 7% note. |
July 21. | Purchased tools by issuing a $99,000, 90-day note to Columbia Supply Co., which discounted the note at the rate of 7%. |
Aug. 14. | Paid Acme Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $172,800. (Journalize both the debit and credit to the notes payable account.) |
Oct. 13. | Paid Acme Bank the amount due on the note of August 14. |
Oct. 19. | Paid Columbia Supply Co. the amount due on the note of July 21. |
Dec. 1. | Purchased office equipment from Mountain Equipment Co. for $120,000, paying $20,000 and issuing a series of ten 6% notes for $10,000 each, coming due at 30-day intervals. |
Dec. 12. | Settled a product liability lawsuit with a customer for $85,000, payable in January. Emerald Bay accrued the loss in a litigation claims payable account. |
Dec. 31. | Paid the amount due Mountain Equipment Co. on the first note in the series issued on December 1. |
Required:
1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place. Don't round the intermediate calculations.
For a compound transaction, accounts should be listed largest to smallest.
Date | Account | Debit | Credit |
---|---|---|---|
Feb. 15 | |||
Mar. 17 | |||
May 16 | |||
June 15 | |||
July 21 | |||
Aug. 14 | |||
Oct. 13 | |||
Oct. 19 | |||
Dec. 1 | |||
Dec. 12 | |||
Dec. 31 | |||
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year: (a) product warranty cost, $19,000; (b) interest on the nine remaining notes owed to Mountain Equipment Co.
Item | Account | Debit | Credit |
---|---|---|---|
a. | |||
b. | |||