Date Account Titles and Explanation Debit Credit May 10 May 18 June 1 September
ID: 2537721 • Letter: D
Question
Date
Account Titles and Explanation
Debit
Credit
May 10
May 18
June 1
September 30
SHOW LIST OF ACCOUNTS
Account Titles and Explanation
Debit
Credit
SHOW LIST OF ACCOUNTS
Described below are certain transactions of Lamar Company for 2018:1. On May 10, the company purchased goods from Fox Company for $72,400, terms 2/10, n/30. Purchases and accounts payable are recorded at net amounts. The invoice was paid on May 18. 2. On June 1, the company purchased equipment for $94,800 from Rao Company, paying $34,800 in cash and giving a one-year, 9% note for the balance. 3. On September 30, the company discounted at 10% its $200,000, one-year zero-interest-bearing note at Virginia State Bank.
Explanation / Answer
Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 10-May Purchases / Inventory 70,952.00 $72,400 X 98% Accounts Payable 70,952.00 (record the inventory puchased) 1-Jun Equipment 94,800.00 Cash 34,800.00 Notes Payable 60,000.00 $94,800 - $34,800 (record the equipment purchased) 30-Sep Cash 180,000.00 Discount on Notes Payable 20,000.00 Notes Payable 200,000.00 (Record the amount borrowed) Adjusting Entry 31-Dec Interest Expense 3,150.00 $60,000 X 9% X 7/12 Interest Payable 3,150.00 $60,000 X 9% X 7/12 (To record the interest expense) 31-Dec Interest Expense 5,000.00 $20,000 X 3/12 Discount on Notes Payable 5,000.00 (to record the amortization of discount) Answer 2. Current Liabilities Interest Payable 3,150.00 Notes Payable - Rao Company 60,000.00 Notes Payable - Virginia State Company 200,000.00 Less: Discount on Notes Payable (15,000.00) 185,000.00 248,150.00
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