The following items were selected from among the transactions completed by Sherw
ID: 2586190 • Letter: T
Question
The following items were selected from among the transactions completed by Sherwood Co. during the current year:
Mar. 1 Purchased merchandise on account from Kirkwood Co., $390,000, terms n/30. 31 Issued a 30-day, 10% note for $390,000 to Kirkwood Co., on account. Apr. 30 Paid Kirkwood Co. the amount owed on the note of March 31. Jun. 1 Borrowed $156,000 from Triple Creek Bank, issuing a 45-day, 8% note. Jul. 1 Purchased tools by issuing a $216,000, 60-day note to Poulin Co., which discounted the note at the rate of 6%. 16 Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $156,000. (Journalize both the debit and credit to the notes payable account.) Aug. 15 Paid Triple Creek Bank the amount due on the note of July 16. 30 Paid Poulin Co. the amount due on the note of July 1. Dec. 1 Purchased equipment from Greenwood Co. for $500,000, paying $150,000 cash and issuing a series of ten 8% notes for $35,000 each, coming due at 30-day intervals. 22 Settled a product liability lawsuit with a customer for $310,000, payable in January. Accrued the loss in a litigation claims payable account. 31 Paid the amount due to Greenwood Co. on the first note in the series issued on December 1.Explanation / Answer
Date Account/Description Debit Credit 1-Mar Merchandise inventory 390,000 Accounts payable-Kirkwood 390,000 31-Mar Accounts payable-Kirkwood 390,000 Notes payable 390,000 30-Apr Notes payable 390,000 interest expense (390,000*10%*30/360) 3250 Cash 393,250 1-Jun Cash 156,000 notes payable 156,000 1-Jul tools 213840 interest expense(216000*6%*60/360) 2160 Notes payable 216000 16-Jul note payable 156,000 interest expense (156000*8%*45/360) 1560 note payable 156,000 Cash 1,560 15-Aug notes payable 156,000 interest expense (156000*6.5%*30/360) 845 cash 156,845 30-Aug notes payable 216000 Cash 216,000 1-Dec Equipment 500,000 Cash 150,000 Notes payable 350,000 22-Dec Litigation loss 310,000 litigation Claims payable 310,000 31-Dec notes payable 35,000 interest expense (35000*8%*30/360) 233 cash 35,233 2) product warranty expense 25,500 product warranty payable 25,500 interest expense 2100 interest payable (35000*9*8%*30/360) 2,100
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.