The following items were selected from among the transactions completed by Pione
ID: 2467635 • 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., $366,000, terms n/30.
31
Issued a 30-day, 6% note for $366,000 to Galston Co., on account.
Apr.
30
Paid Galston Co. the amount owed on the note of March 31.
Jun.
1
Borrowed $198,000 from Pilati Bank, issuing a 45-day, 8% note.
Jul.
1
Purchased tools by issuing a $270,000, 60-day note to Zegna Co., which discounted the note at the rate of 6%.
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 $198,000. (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 $108,000 and issuing a series of ten 8% notes for $29,200 each, coming due at 30-day intervals.
22
Settled a product liability lawsuit with a customer for $320,000, 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.
Required:
1.
Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. Round your answers to the nearest dollar.
2.
Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles):
A.
Product warranty cost, $29,000.
B.
Interest on the nine remaining notes owed to Taylor Co. Assume a 360-day year.
CHART OF ACCOUNTS
Pioneer Co.
General Ledger
ASSETS
110
Cash
111
Accounts Receivable
112
Interest Receivable
113
Notes Receivable
115
Merchandise Inventory
116
Supplies
118
Prepaid Insurance
120
Land
123
Building
124
Accumulated Depreciation-Building
125
Office Equipment
126
Accumulated Depreciation-Office Equipment
127
Tools
128
Accumulated Depreciation-Tools
LIABILITIES
210
Accounts Payable-Galston Co.
211
Accounts Payable-Taylor Co.
212
Accounts Payable-Zegna Co.
213
Interest Payable
214
Notes Payable
215
Salaries Payable
216
Social Security Tax Payable
217
Medicare Tax Payable
218
Employees Federal Income Tax Payable
219
Employees State Income Tax Payable
220
Group Insurance Payable
221
Bond Deductions Payable
224
Federal Unemployment Tax Payable
225
State Unemployment Tax Payable
226
Vacation Pay Payable
227
Unfunded Pension Liability
228
Product Warranty Payable
229
Litigation Claims Payable
EQUITY
310
Owner, Capital
311
Owner, Drawing
312
Income Summary
REVENUE
410
Sales
610
Interest Revenue
EXPENSES
510
Cost of Merchandise Sold
520
Salaries Expense
524
Depreciation Expense-Building
525
Delivery Expense
526
Repairs Expense
529
Selling Expenses
531
Rent Expense
532
Depreciation Expense-Office Equipment
533
Depreciation Expense-Tools
534
Insurance Expense
535
Supplies Expense
536
Payroll Tax Expense
537
Vacation Pay Expense
538
Pension Expense
539
Cash Short and Over
540
Product Warranty Expense
541
Miscellaneous Expense
710
Interest Expense
720
Litigation L
1. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. Scroll down to access page 12 of the journal. Round your answers to the nearest dollar.
PAGE 11
JOURNAL
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
2.
Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles):
A.
Product warranty cost, $29,000.
B.
Interest on the nine remaining notes owed to Taylor Co. Assume a 360-day year.
Mar.
1
Purchased merchandise on account from Galston Co., $366,000, terms n/30.
31
Issued a 30-day, 6% note for $366,000 to Galston Co., on account.
Apr.
30
Paid Galston Co. the amount owed on the note of March 31.
Jun.
1
Borrowed $198,000 from Pilati Bank, issuing a 45-day, 8% note.
Jul.
1
Purchased tools by issuing a $270,000, 60-day note to Zegna Co., which discounted the note at the rate of 6%.
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 $198,000. (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 $108,000 and issuing a series of ten 8% notes for $29,200 each, coming due at 30-day intervals.
22
Settled a product liability lawsuit with a customer for $320,000, 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.
Required:
1.
Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. Round your answers to the nearest dollar.
2.
Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles):
A.
Product warranty cost, $29,000.
B.
Interest on the nine remaining notes owed to Taylor Co. Assume a 360-day year.
Explanation / Answer
S.No Date Particulars Post Ref Debit Credit 1 mar-1 Sale (Galstone) 366,000 Account Payable (Galstone) 366,000 Mar-31 Note Payable 366,000 Interest Payable 21,960 sale 387,960 Apr-30 Note Payable 366,000 Interest Payable 21,960 Cash 387,960 June-1 Note payable (bank borrowing) 198,000 Interest payable (8%) 15,840 Bank account 213840 July-1 Tools (Purchase) 270,000 Account payable (zegna ) 270,000 Account payable (zegna 6% discount) 253,800 Note payable 253,800 July-16 Interest Expense 15,840 Cash 15,840 Interest payable (6.5%) 11,880 Bank account 11,880 Aug-15 Interest expense 11,880 Cash 11,880 Aug-30 Note Payable 253,800 cash 253,800 Dec-1 Office equipmet (Taylor.co) 400,000 cash 108,000 Notes Payable (29,200*10) 292,000 Interest Payable (29,200*8% *10) 23360 Notes Payable 23360 dec-22 Litigation claims payable 320,000 Litigation 320,000 Dec-31 Note Payable 2336 cash 2336 Product Warrenty Payable 29,000 cash 29,000 Notes Payable 21024 Office equipment 21024
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