The following items were selected from among the transactions completed by Pione
ID: 2466454 • Letter: T
Question
The following items were selected from among the transactions completed by Pioneer Co. during the current year:
Mar. 1 Purchased merchandise on account from Galston Co., $360,000, terms n/30. 31 Issued a 30-day, 5% note for $360,000 to Galston Co., on account. Apr. 30 Paid Galston Co. the amount owed on the note of March 31. Jun. 1 Borrowed $180,000 from Pilati Bank, issuing a 45-day, 4% note. Jul. 1 Purchased tools by issuing a $210,000, 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 $180,000. (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 $500,000, paying $120,000 and issuing a series of ten 6% notes for $38,000 each, coming due at 30-day intervals. 22 Settled a product liability lawsuit with a customer for $310,000, payable in January. Pioneer accrued the loss in a litigation claims payable account. 31 Paid the amount due Taylor Co. on the first note in the series issued on December 1.Explanation / Answer
Journal entries are recorded as shown below:
Date Particulars L.F Amount ($) Amount ($) 20XX 3,60,000 Mar-01 Merchandise Inventory 3,60,000 Accounts Payable- Galston Co. (for merchandise purchased on account) Mar-31 Accounts Payable- Galston Co. 3,60,000 5% Notes Payable 3,60,000 (For 30-day 5% notes issued) Apr-30 5% Notes payable 360000 Interest expense 1500 Cash 361500 (For paid amount to Galston) Jun-01 Cash 1,80,000 4% Notes Payable 1,80,000 (For borrowed from Bank against notes payable) Jul-01 Tools purchased 210000 7% notes payable 210000 (For purchased tools against 7% notes payable from Zegna Co.) Jul-16 Interest expense 900 4% Notes Payable 1,80,000 Cash 900 6.5% Notes Payable 1,80,000 (For interest paid and notes renewed) Aug-15 6.5% Notes Payable 1,80,000 Interest expense 975 Cash 1,80,975 (For note due paid) Aug-30 7% Notes Payable 2,10,000 Interest expense 2,450 Cash 2,12,450 (For note due paid) Dec-01 Office equipment 5,00,000 Cash 1,20,000 6% Notes Payable 3,80,000 (For purchased equipment against notes payable and cash) Dec-22 Litigation loss 3,10,000 Litigation claims payable 3,10,000 (For loss settled) Dec-31 6% Notes Payable 38,000 Interest expense 190 Cash 38,190 ( For first due note paid) Dec-31 Product Warranty expense 27,500 Product Warranty Payable 27,500 (For accrued expense recorded) Dec-31 Interest Expense 1,710 Interest payable 1,710 (For accrued interest recorded) (38000*9*6%*30/360)Related Questions
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