Arenado Company completed the following transactions during 2017. He operates on

Question

Arenado Company completed the following transactions during 2017. He operates on a calendar year. Jan. 8 Purchased inventory on account at an invoice cost of $14,860; assume a perpetual inventory system. Paid January 8 invoice. Borrowed $35,000 from National Bank for general use on a 12-month, 8% interest-bearing note payable. Purchased merchandise for resale on account at an invoice cost of $17,420. Jan. 17 Apr. 1 June 3 July 5 Paid June 3 invoice. Aug. 1 Dec. 20Received a $100 deposit from a customer as a guarantee to return a large trailer Dec. 31 Determined wages of $9,500 earned but not yet paid on December 31 (omit Rented a small office in their building to a customer. Collected six months' rent in advance amounting to $6,000. borrowed for 30 days. payroll taxes). Required 1. Prepare journal entries for the above transactions. 2. Prepare all necessary adjusting entries at year-end regarding the above transactions.

Explanation / Answer

08-Jan Merchandise inventory 14860               Accounts payable 14860 17-Jan Accounts payable 14860              cash 14860 01-Apr Cash 35000          Notes payable 35000 03-Jun Merchandise inventory 17420               Accounts payable 17420 05-Jul Accounts payable 17420              cash 17420 01-Aug Cash 6000           Uneared revenue 6000 20-Dec Cash 100         Security deposit 100 31-Dec Wages expense 9500                 Wages payable 9500 Adjusting entries 31-Dec Interest expense 2100 (35000*8%*9/12)               Interest payable 2100 31-Dec Unearned revenue 5000 (6000*5/6)              Rent revenue 5000

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