The following information applies to the questions displayed below. On January 1

Question

The following information applies to the questions displayed below. On January 1, 2018, the general ledger of Freedom Fireworks includes the ollowing account balances: owance or Uncollectible Accounts 3800 Retained Eain Totals uring January 2018, the following transactions occur January 1 Borrow $120,000 from Captive Credit Corporation. The installment note ears interest at 5% annually and matures in 5 years. Payments of $2.180 are equired at the end of each month for 60 months January 4 Receive $33,000 from customers on accounts receivable. January 10 Pay cash on accounts payable, $31,000 January 15 Pay cash for salaries, $30,900 January 30 Firework sales for the month total $206,000. Sales include $67,000 for cash and $139,000 on account. The cost of the units sold is $122,500. January 31 Pay the first monthly installment of $2,180 related to the $120,000 orrowed on January 1. Round your interest calculation to the nearest dollar. Record each of the transactions listed above. (If no entry is required for a ransaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Borrow $120,000 from Captive Credit Corporation The instaliment note bears interest t 5% omaally and mature", 5 years n"ments of $2.180 required at the end of each month for 60 months

Explanation / Answer

1)

Credit(IN $'S)

CASH A/C----------------------------------DR

TO CAPATIVE CREDIT CORPORATIONA/C

(BEING AMOUNT BORROWED FROM CAPTIVE CREDIT)

120000

120000

CASH A/C --------------------------------DR

TO ACCOUNTS RECEIVVABLE A/C

(BEING AMOUNT RECIEVED FROM DEBTORS)

33000

33000

ACCOUNTS PAYABLE A/C----------------------DR

TO CASH A/C

(BEING CASH PAID TO CREDITORS)

31000

31000

SALARIES A/C ---------------------------------------DR

TO CASH A/C

(BEING SALARIES PAID)

30900

30900

CAPATIVE CREDIT CORPORATION A/C----------DR

INTEREST A/C ----------------------------------------------DR

TO CASH A/C

(BEING 1ST INSTALLEMENT PAID WITH INTEREST 5@ANNUALLY)

2000

180

2180

2)

DEPRECIATION A/C --------------------------------DR

TO ACCUMULATED DEPRECIATION A/CE)

(BEING DEPRECIATION CALCULATED ((140000-26000)/10)*1/12

950

950

CASH A/C ---------------------------------DR

TO ACCOUNTS RECEAVABLE A/C

( BEING AMT RECIVED FRM A.RECEAVABLE WHICH IS

WRITEEN OFF)

5000

5000

SALARIES A/C---------------------------------------DR

TO SALARIES PAYABLE A/C

(BEING SALRIES UNPAID)

28100

INCOME TAX A/C -------------------------------------DR

TO INCOME TAX PAYABLE A/C

(BEING INCCOME TAX UNPAID)

10000

Date Particulars
Debit(IN $'S)

Credit(IN $'S)

1ST JAN

CASH A/C----------------------------------DR

TO CAPATIVE CREDIT CORPORATIONA/C

(BEING AMOUNT BORROWED FROM CAPTIVE CREDIT)

120000

120000

4TH JAN

CASH A/C --------------------------------DR

TO ACCOUNTS RECEIVVABLE A/C

(BEING AMOUNT RECIEVED FROM DEBTORS)

33000

33000

10TH JAN

ACCOUNTS PAYABLE A/C----------------------DR

TO CASH A/C

(BEING CASH PAID TO CREDITORS)

31000

31000

15TH JAN

SALARIES A/C ---------------------------------------DR

TO CASH A/C

(BEING SALARIES PAID)

30900

30900

30TH JAN ENTRY NOT REQUIRED 31ST JAN

CAPATIVE CREDIT CORPORATION A/C----------DR

INTEREST A/C ----------------------------------------------DR

TO CASH A/C

(BEING 1ST INSTALLEMENT PAID WITH INTEREST 5@ANNUALLY)

2000

180

2180

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