2010 Jan 9- Purchased computer equipment at a cost of $10,000, signing a six mon
ID: 2355480 • Letter: 2
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2010 Jan 9- Purchased computer equipment at a cost of $10,000, signing a six month, 8% note payable for that amount. Jan 29- Recorded the week's sales of $67,000, three-fourth on credit, and one-fourth for cash. Sales amounts are subject to a 6% state sales tax. Feb 5- Sent the last week's sales tax to the state. Feb 28- Borrowed $210,000 on a four-year, 9% note payable that calls for $52,500 annual installment payments plus interest. Record the short-term and long-term portions of the note payable in two separate accounts. July 9- Paid the six-month, 8% note, plus interest, at maturity. Aug 31- Purchased inventory for $6,000, signing a six-month, 10% note payable. Dec 31- Accrued warranty expenses, which is estimated at 3% of sales of $601,000. Dec 31- Accrued interest on all outstanding notes payable. Make a separate interest accrual for each note payable. 2011 Feb 28- Paid the first installment and interest for one year on the four-year note payable. Feb 28- Paid off the 10% note plus interest at maturity. REQUIREMENT: Journalize the transactions in Brewton's general journal.Explanation / Answer
2010 Jan 9- Purchased computer equipment at a cost of $10,000, signing a six month, 8% note payable for that amount. Computer equipment Dr. 10000 Note payable Cr. 10000 Jan 29- Recorded the week's sales of $67,000, three-fourth on credit, and one-fourth for cash. Sales amounts are subject to a 6% state sales tax. Accounts receivable Dr. 54270 Cash Dr. 16750 Sales Cr. 67000 Sales tax payable Cr. 4020 Feb 5- Sent the last week's sales tax to the state. Sales tax payable Dr. 4020 Cash Cr. 4020 Feb 28- Borrowed $210,000 on a four-year, 9% note payable that calls for $52,500 annual installment payments plus interest. Record the short-term and long-term portions of the note payable in two separate accounts. Cash Dr. 210000 Notes payable - short term Cr. 52500 Notes payable - long term Cr. 157500 July 9- Paid the six-month, 8% note, plus interest, at maturity. Notes payable Dr. 10000 Interest expense Dr. 400 (10000*.08/2) Cash Cr. 10400 Aug 31- Purchased inventory for $6,000, signing a six-month, 10% note payable. Inventory Dr. 6000 Notes payable Cr. 6000 Dec 31- Accrued warranty expenses, which is estimated at 3% of sales of $601,000. Warranty expense Dr. 18030 Provision for warranties Cr. 18030 Dec 31- Accrued interest on all outstanding notes payable. Make a separate interest accrual for each note payable. BORROWED MONEY NOTE Interest expense Dr. 15750 (210000*.09/12*10) Interest payable Cr. 15750 INVENTORY NOTE Interest expense Dr. 200 (6000*.1/12*4) Interest payable Cr. 200 2011 Feb 28- Paid the first installment and interest for one year on the four-year note payable. Interest expense Dr. 3150 (210000*.09 -15750) Interest payable Dr. 15750 Notes payable - short term Dr. 33100(52500-3150-15750) Cash Cr. 52500 Feb 28- Paid off the 10% note plus interest at maturity. Notes payable Dr. 6000 Interest expense Dr. 100 Interest payable Dr. 200 Cash Cr. 6300 Hope this helps!
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