Question
In: Accounting
The January 1, 2016 trial balance for the Taylor company is found on the trial balance...
The January 1, 2016 trial balance for the Taylor company is found on the trial balance tab. The beginning balances are assumed. Perry Co. entered into the following transactions involving short-term liabilities in 2016 and 2017. (use 360 days a year).
2016
Apr. 20 Purchased $46,750 of merchandise on credit from Parker, terms are n/30. Perry uses the perpetual inventory system.
May 19 Replaced the April 20 account payable to Parker with a 90-day, $36,000 note bearing 10% annual interest along with paying $10,750 in cash.
July 8 Borrowed $84,000 cash from AKR Bank by signing a 120-day, 10% interest-bearing note with a face value of $84,000.
Aug 17 Paid the amount due on the note to Parker at the maturity date.
Nov 5 Paid the amount due on the note to AKR Bank at the maturity date.
Nov 28 Borrowed $81,000 cash from Chicago Bank by signing a 60-day, 8% interest-bearing note with a face value of $81,000.
Dec 31 Recorded an adjusting entry for accrued interest on the note to Chicago Bank.
2017
Jan 27 Paid the amount due on the note to Chicago Bank at he maturity date.
Requirement
General Journal tab-Prepare the 2016 journal entries related to the notes and accounts payable of Perry Co.
Calculation of interest tab-Use the interest formula (P x R x T) to verify the amount of interest recorded in your entries.
2017 payment tab- Prepare the January 27, 2017 entry to record the repayment of the note at maturity.
Solutions
Expert Solution
Answer:
| Date | General Journal | Debit | Credit |
| 2016 | |||
| Apr. 20 | Inventory | 46,750 | |
| Accounts payable | 46,750 | ||
| (To record purchases on account) | |||
| May. 19 | Accounts payable | 46,750 | |
| Cash | 70,750 | ||
| Notes payable | 36,000 | ||
| (To record note issued) | |||
| Jul. 8 | Cash | 84,000 | |
| Notes payable | 84,000 | ||
| (To record borrowing against note) | |||
| Aug. 17 | Notes payable | 36,000 | |
| Interest expense ($36,000 x 10% x 90/360) | 900 | ||
| Cash | 36,900 | ||
| (To record payment of note and interest) | |||
| Nov. 5 | Notes payable | 84,000 | |
| Interest expense ($84000 x 9% x 120/360) | 2,520 | ||
| Cash | 86,520 | ||
| (To record payment of note and interest) | |||
| Nov. 28 | Cash | 81,000 | |
| Notes payable | 81,000 | ||
| (To record borrowing against note) | |||
| Dec. 31 | Interest expense ($81,000 x 8% x 33/360) | 594 | |
| Interest payable | 594 | ||
| (To record accrued interest) | |||
| 2017 | |||
| Jan. 27 | Notes payable | 81,000 | |
| Interest payable | 594 | ||
| Interest expense ($42000 x 8% x 27/360) | 486 | ||
| Cash | 82,080 | ||
| (To record payment of note and interest) | |||
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References
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid...
Miller Company acquired an 80 percent interest in Taylor Company
on January 1, 2016. Miller paid $896,000 in cash to the owners of
Taylor to acquire these shares. In addition, the remaining 20
percent of Taylor shares continued to trade at a total value of
$224,000 both before and after Miller’s acquisition.On January 1,
2016, Taylor reported a book value of $626,000 (Common Stock =
$313,000; Additional Paid-In Capital = $93,900; Retained Earnings =
$219,100). Several of Taylor’s buildings that...
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid...
Miller Company acquired an 80 percent interest in Taylor Company
on January 1, 2016. Miller paid $896,000 in cash to the owners of
Taylor to acquire these shares. In addition, the remaining 20
percent of Taylor shares continued to trade at a total value of
$224,000 both before and after Miller’s acquisition.
On January 1, 2016, Taylor reported a book value of $406,000
(Common Stock = $203,000; Additional Paid-In Capital = $60,900;
Retained Earnings = $142,100). Several of Taylor’s buildings...
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid...
Miller Company acquired an 80 percent interest in Taylor Company
on January 1, 2016. Miller paid $768,000 in cash to the owners of
Taylor to acquire these shares. In addition, the remaining 20
percent of Taylor shares continued to trade at a total value of
$192,000 both before and after Miller’s acquisition.
On January 1, 2016, Taylor reported a book value of $616,000
(Common Stock = $308,000; Additional Paid-In Capital = $92,400;
Retained Earnings = $215,600). Several of Taylor’s buildings...
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid...
Miller Company acquired an 80 percent interest in Taylor Company
on January 1, 2016. Miller paid $856,000 in cash to the owners of
Taylor to acquire these shares. In addition, the remaining 20
percent of Taylor shares continued to trade at a total value of
$214,000 both before and after Miller’s acquisition.
On January 1, 2016, Taylor reported a book value of $752,000
(Common Stock = $376,000; Additional Paid-In Capital = $112,800;
Retained Earnings = $263,200). Several of Taylor’s buildings...
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid...
Miller Company acquired an 80 percent interest in Taylor Company
on January 1, 2016. Miller paid $744,000 in cash to the owners of
Taylor to acquire these shares. In addition, the remaining 20
percent of Taylor shares continued to trade at a total value of
$186,000 both before and after Miller’s acquisition. On January 1,
2016, Taylor reported a book value of $464,000 (Common Stock =
$232,000; Additional Paid-In Capital = $69,600; Retained Earnings =
$162,400). Several of Taylor’s buildings...
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