Three parts to this problem Long-Term Liabilities Problems Group A P14-32A Journ

Question

Three parts to this problem

Long-Term Liabilities Problems Group A P14-32A Journalizing liability transactions and reporting them on the balance Learning sheet The following transactions of Johnson Pharmacies occurred during 2018 and 201% 2. Total Liabities $653.334 2018 Borrowed $450,000 from Coconut Creek Bank. The 15-year, 5% note requires payments due annually, on March 1. Each payment consists of $30,000 principal plus one year's interest. Mortgaged the warehouse for $250,000 cash with Saputo Bank. The mortgage requires monthly payments of $8,000. The interest rate on the note is 12% and accrues monthly. The first payment is due on January 1, 2019. Recorded interest accrued on the Saputo Bank note. Recorded interest accrued on the Coconut Creek Bank note. Mar. 1 Dec. 1 31 31 2019 Jan. 1 Paid Saputo Bank monthly mortgage payment. Feb. 1 Paid Saputo Bank monthly mortgage payment. Mar. 1 Paid Saputo Bank monthly mortgage payment. 1 Paid first installment on note due to Coconut Creek Bank Requirements 1. Journalize the transactions in the Johnson Pharmacies general journal. Round to the nearest dollar. Explanations are not required. 2. Prepare the liabilities section of the balance sheet for Johnson Pharmacies on March 1, 2019 after all the journal entries are recorded

Explanation / Answer

Journal Entries Date Account Title and explanation Debit Credit Cash $               4,50,000 Mar, 01 2018         To 5% Note $                 4,50,000 (To Record the amount borrowed) Cash $               2,50,000 Dec , 01 2018        To Mortgage Loan $                 2,50,000 (To Record the mortgage Loan) Interest Expenses $                  20,417 Dec , 31 2018          To Interest Payable $                     20,417 (To Record the interest Expenses of the year) Interest on Mortgage loan = $ 250,000 X 12%X1/12 = $                     2,500 Interest on note @ 5%= $ 450,000 X 5% X 10/12 = $                  18,750 Total $                  21,250 Jan, 01 2019 Interest Payable $                     2,500 Mortgage Loan $                     5,500        To Cash $                       8,000 (To Record the interest payment) Interest Expenses $                     2,445 Feb, 01 2019 Mortgage Loan $                     5,555        To Cash $                       8,000 (To Record the interest payment) Mortgage laon amount = $               2,50,000 Less: Payment of principal amt = $                     5,500 Balance as on Jan, 01 2019 $               2,44,500 Interest @ 1% for one month $                     2,445 Closing Balance $               2,42,055 Interest Expenses $                     2,365 Mar, 01 2019 Mortgage Loan $                     5,635        To Cash $                       8,000 (To Record the interest payment) Mortgage laon amount = $               2,42,055 Less: Payment of principal amt = $                     5,555 Balance as on Feb, 01 2019 $               2,36,500 Interest @ 1% for one month $                     2,365 Closing Balance $               2,34,135 Interest Payable (uptp Dec ) $                  18,750 Mar, 01 2019 Interest Expenses (450.000X 5% X 2/12) $                     3,750 5% Note $                  30,000        To Cash $                     52,500 (To Record the first installment payment) BALANCE SHEET (LIABILITY SECTION ) Long Term Liabilities 5% Note ($ 450,000 - $ 30,000) $               4,20,000 Short Term Liabilities Mortgage Loan $               2,34,135 Total $               6,54,135

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.