ACC 2010-2016-Chapters 12 and 13 Extra Credit Opportunity Please complete the tw

Question

ACC 2010-2016-Chapters 12 and 13 Extra Credit Opportunity Please complete the two problems (7.5 points each) for a total of 15 points. Please complete and submit into the dropbox in the Chapter 12 folder on Blackboard by April 29 at l1.59 PM. PROBLEMI Journalizing liability transactions and reporting them on the Balance Sheet The following transactions of Johnson Pharmaceuticals occurred during 2014-2105 DATE 2014 March 1 Borrowed $100,000 from Naples Bank. The five (5) year, l 5% note requires payments TRANSACTION due annually, on March 1. Each payment consists of $20,000 principal plus one years interest December 1 Mortgaged the warehouse for $400,000 cash with Sage Bank. The mortgage requires monthly payments of $8,000. The interest rate on the note is 7% and accrues monthly. The first payment is due on January 1, 2015. December 31 Recorded interest accrued on the SAGE BANK note December 31 Recorded interest accrued on the NAPLES BANK notoe. 2015 January 1 February 1 MarchI MarchI Paid Sage Bank monthly mortgage payment Paid Sage Bank monthly mortgage payment Paid Sage Bank monthly mortgage payment Paid first installment on note due to Naples Bank IRE 1) Journalize the transactions in the Johnson Pharmacies general journal. Round all answers to the nearest dollar 2) Prepare the liabilities section on the balance sheet for Johnson Pharmacies on March 1, 2015.

Explanation / Answer

Question 1

$                     5,667

Question 2

Mar-01 Cash $ 100,000 Long term Notes Payable $ 100,000 Borrowed cash from Naples Bank and issued note at 15% per annum Dec-01 Cash $ 400,000 Mortgage Payable $ 400,000 Mortgaged warehouse at 7% notes payable Dec-31 Interest Expense $   12,500 Interest Payable $   12,500 Interest accrued on long term notes payable = 100000 x (15/12) x 10 Dec-31 Interest Expense $      2,333 Interest Payable $      2,333 Accrued interest for 1 month on mortgage payable = 400000 x 7/12 Jan-01 Interest Payable $      2,333 Mortgage Payable $      5,667 Cash $      8,000 Paid installment on mortgage 8000, principal 5667 and interest 2333 Feb-01 Interest Expenses $      2,300 Mortgage Payable $      5,700 Cash $      8,000 Paid installment on mortgage 8000, principal 5700 and interest 2300 Mar-01 Interest Expenses $      2,267 Mortgage Payable $      5,733 Cash $      8,000 Paid installment on mortgage 8000, principal 5733 and interest 2267 Mar-01 Interest payable $   12,500 Interest expense $      2,500 Long term notes payable $   20,000 Cash $   35,000 Annual installment of long term notes payable, principal 20000, interest 15000

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