The following items were selected from among the transactions completed by Pione
ID: 2448130 • Letter: T
Question
The following items were selected from among the transactions completed by Pioneer Co. during the current year:
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Chart of Accounts
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Mar. 1 Purchased merchandise on account from Galston Co., $396,000, terms n/30. 31 Issued a 30-day, 4% note for $396,000 to Galston Co., on account. Apr. 30 Paid Galston Co. the amount owed on the note of March 31. Jun. 1 Borrowed $174,000 from Pilati Bank, issuing a 45-day, 4% note. Jul. 1 Purchased tools by issuing a $258,000, 60-day note to Zegna Co., which discounted the note at the rate of 7%. 16 Paid Pilati Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $174,000. (Journalize both the debit and credit to the notes payable account.) Aug. 15 Paid Pilati Bank the amount due on the note of July 16. 30 Paid Zegna Co. the amount due on the note of July 1. Dec. 1 Purchased office equipment from Taylor Co. for $400,000, paying $114,000 and issuing a series of ten 4% notes for $28,600 each, coming due at 30-day intervals. 22 Settled a product liability lawsuit with a customer for $311,500, payable in January. Pioneer accrued the loss in a litigation claims payable account. 31 Paid the amount due Taylor Co. on the first note in the series issued on December 1.Explanation / Answer
Mar 1:
Merchandise Inventory (db)$396,000
Accounts Payable-Galston Co.(cr) $396,000
Mar 31:
Accounts Payable-Galston Co.(db) $396,000
Notes Payable (cr) $396,000
Apr 30:
Notes Payable (db) $396,000
Interest expense(db) $1200 (360,000*30/360*4/100)=$1,200)
Cash (cr) $397,200
Jun 1:
Cash(db) $174,000
Notes Payable (cr) $174,000
Jul 1:
Tools (db) $258,000
Notes payable (cr) $258,000
Jul 16:
Notes Payable (db) $174,000
interest expense (db) $870 (174000*45/360*4/100=870)
Cash (cr) $870
Notes Payable (cr) $174,000
Aug 15:
Notes Payable (db) $174,000
Interest expense (db) $942.5 ( 174000*30/360*6.5/100=942.5)
Cash (cr) $174,942.5
Aug 30:
Interest expense (db) $3010 ((258000*60/360*7/100)=3010))
Notes payable(db) $258,000
Cash(cr) $261,010
Dec 1:
office Equipment (db) 400,000
cash (cr)114,000
Notes payabe (cr) $286,000
Dec 22:
Litigaton loss(db) $311,500
Litigation Claims Payable(cr) $311,500
Dec 31:
Interest expene (db)$95.33 (28600*30/360*4/100= 95.33)
Notes paable (db) $28,600
Cash(cr) 28,695.33
2)Product Warranty Expense (db) $28,000
Cash (cr) $28,000
Interet Expense (db) $4,194.66
Interest payable (cr) $4,194.66
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