eBook Show Me How Calculator Liability transactions Chart of Account Journal Ins

Question

eBook Show Me How Calculator Liability transactions Chart of Account Journal Instructions The following items were selected from among the transactions completed by O'Donnel Co. during the current year: Jan. 10. Purchased merchandise on account from Laine Co, $372,000, terms n/30. Feb. 9. Issued a 30-day, 4% note for $372,000 to Laine Co., on account Mar. 11. Paid Laine Co. the amount owed on the note of February 9 May 1. Borrowed $150,000 from Tabata Bank, issuing a 45-day, 8% note. June 1. Purchased tools by issuing a $276,000, 60-day note to Gibala Co., which discounted the note at the rate of 6%. 15. Paid Tabata Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 6.5% note for $150,000. (Journalize both the debit and credit to the notes payable account.) Paid Tabata Bank the amount due on the note of June 15. Paid Gibala Co. the amount due on the note of June 1. July 30. 30. Dec. 1. Purchased office equipment from Warick Co. for $540,000, paying $108,000 and issuing a series of ten 4% notes for $43,200 each, coming due at 30-day intervals 15. Settled a product liability lawsuit with a customer for 309,500, payable in January more Check My Work uses remaining

Explanation / Answer

O'Donnel Company General Journal for the current year Date Account Title Debit Credit Jan.10 Merchandise Inventory 372000 Accounts Payable 372000 (To record purchase of merchandise on account from Laine Co.) Feb.9 Accounts Payable 372000 4% Note payable 372000 (To record issuance of note payable to Laine Co.) Mar.11 4% Note payable 372000 Interest expense 1240 Cash 373240 (To recrod payment to Laine Co. On notepayable) May.1 Cash 150000 45-day, 8% note payable 150000 (To record amount borrowed against note payable) June.1 Tools 276000 Note payable 276000 (To record purchase of tools on note payable from Gibala Co.) June.15 45-day, 8% note payable 150000 Interest expense 1500 Cash 1500 45-day 6.5% note payable 150000 (To record renewal of May.1 note with a new note) July.30 45-day 6.5% note payable 150000 Interest expense 1219 Cash 151219 (To record payment of June 15 note payable) July.30 Note payable 276000 Cash 276000 (To record payment of note payable to Gibala Co.) Dec.1 Office equipment 540000 Cash 108000 4% Note payable 432000 (To record purchase of office equipment on cash and note payable) Dec.15 Product liability expenses 309500 Litigation claims payable acount 309500 (To record settlemen of lawsuit against the company ) Dec.31 4% note payable 43200 Interest expense 144 Cash 43344 (To record settlement of the first note issued on Dec.1) 2. Adjustment entries Date Account Title Debit Credit Dec.31 Warannty expense 48000 Warranty expense payable 48000 (To record the warranty expense ) Dec.31 Interest expense 1296 Interest payable 1296 (To record the interest expense on the remaining notes payable of Dec.1)

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