Warren Plastic, LLC complete these transactions in year 1 and year 2. Give gener
ID: 2502758 • Letter: W
Question
Warren Plastic, LLC complete these transactions in year 1 and year 2. Give general journal entries for them.
date yr
2/2 1 Purchased equipment for 55,000, signed a 4 month note, 7.5%.
2/28 1 Recorded the month's sales of 175,000, one-sixth cash, five-sixth's credit. Sales tax rate is 4.6%
3/20 1 Sent Feb. sales tax to the state.
6/30 1 Borrowed $153,000 on a long-term note, 8.75% note payable.
Annual interest is to be paid each year on 6-30, starting yr. 2.
6/2 1 paid off the note dated 2-02-yr 1
10/31 1 bought inventory at a cost of 22,400. Signed a 5 month 4.5% note.
12/31 1 Accrued warranty expense, estimated at 1.5% of 550,000 of sales
12/31 1 Accrued Interest on ALL outstanding notes.
3/31 2 Paid off the inventory note at maturity, including interest.
Explanation / Answer
2/2
debt payment 55000
creditnotespayable 55000
2/28
debit cash 30508 (175000* 1/6+ 4025/3)
debit accounts recievable 152541.67 (175000 * 5/6 + 20125/3)
credit sales 175000
credit salestaxpayable 8050 (4025/3 +20125/3)
3/20
debitsalestax payable 8050
credit cash 8050
6/30
cash 153000
notespayab;e 153000
6/2
debit notespayabel 55000
debit interest expense 1375 (55000* 4/12* 7.5%)
credit cash 56375
10/31
debit rawmaterials inventory 22400
credit notespayable 22400
12/31
debit warranty expense 8250(1.5% *550000)
credit warrenty liability 8250
12/31
debitinterest expense13807.5
credit interest expense 13807.5(153000*8.75% +22400*5/12*4.5%)
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