Richmond company engaged in the following transactions during 2013: a. purchased
ID: 2487880 • Letter: R
Question
Richmond company engaged in the following transactions during 2013:
a. purchased 160,000 of supplies from ABC Supplies on February 16th. Amount due in full on March 31st.
b. paid 25% percent of the purchased merchandise (transaction a)February 26th.
c. on March 31st negotiated a payment extension with ABC for the remainder of the balance from the February 16th purchase by signing a one-year, 10% note.
d. borrowed $300,000 on a 10 month, 8% interest bearing note on April 30th.
e. purchased $78,000 of merchandise on June 4th amount due in full on June 30th.
f. pay for the purchase merchandise ( transaction e) on june 24.
g. received from Haywood Inc on August 19th, a $22,000 deposit against a total selling price of $220,000 for services to be performed for Haywood.
h. pay quarterly installments of Social Security and Medicare and individual income tax withholdings comma as shown Below, on October 15th. The Social Security and Medicare were previously recorded as expenses during the quarter and the amounts paid represent both employee and employer shares(50% each): Social Security taxes $185,000 Medicare taxes $43,266 income tax withheld $319,000
i. on December 15th Richmond completed the service is ordered by Heywood on August 19th. He was remaining balance of $198,000 is due on January 31st.
required:
1. prepare journal entries for these transactions
2. prepare any adjusting entries necessary at December 31st, 2013.
Explanation / Answer
Richmond Company:
1. Journal entries:
2. Adjusting entries:
Interest outstanding on note payable of $ 120,000 = $ 120,000 x 0.10 x 9/12 = $ 9,000
Interest outstanding on loan of $ 300,000 = $ 300,000 x 0.08 x 8 /12 = $ 16,000
Total interest payable as of December 31 = $ 9,000 + $ 16,000 = $ 25,000
Date Account Titles Debit Credit 2013 $ $ February 16 Supplies 160,000 Accounts payable 160,000 February 26 Accounts payable 40,000 Cash 40,000 March 31 Accounts payable 120,000 Note payable 120,000 April 30 Cash 300,000 Note payable 300,000 June 4 Merchandise inventory 78,000 Accounts payable 78,000 June 24 Accounts payable 78,000 Cash 78,000 August 19 Cash 22,000 Unearned service revenue 22,000 October 15 Social security taxes payable 185,000 Medicare taxes payable 43,266 Income tax withheld 319,000 Cash 547,266 December 15 Unearned Service Revenue 22,000 Accounts receivable 198,000 Service revenue 220,000Related Questions
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