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Chrome- CengageNOWv2| Online teaching and learning resource from Cengage Learning Secure https:// v2 cengagenow com n/takeAssignment takeAss?gnmentMain.do?!nvoker-assignments&takeAssignmentSessionLocator-assignment; take&Inprogress-false; CH 11 HW Calculator Print Item Liability Transactions The following items were selected from among the transactions completed by ODonnel Co. during the current year: an. 10. Purchased merchandise on account from Laine Co., $144,000, terms n/30. Feb. 9, Issued a 30-day, 796 note for $144,000 to Laine Co., on account. Mar. 11. Pald Laine Co. the amount owed on the note of February 9 May 1, Borrowed $160,800 from Tabata Bank, issuing a 45-day, 8% note. June 1. Purchased tools by issuing a $102,000, 60-day note to Gibala Supply Co., which discounted the note at the rate of 9%. 15. Paid Tabata Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 796 note for $160,800. (Journalize both the debit and credit to the notes payable account.) July 30, Pald Tabata Bank the amount due on the note or June 15 30. Paid Gibala Co. the amount due on the note of June 1 Dec. 1. Purchased ofrice equlpment trom Warick Co. for $120,000, paying $20,000 and issuing a series or ten 5% notes for $10,000 each, coming due at 30-day intervals. 15. Settled a product liability lawsuit with a customer for $75,000, payable in January. O'Donnel accrued the loss in a litigation claims payable account. 31, Pald the amount due Warick Co. on the first note in the series issued on December 1 Check My Work 5 more Check My Work uses remaining Previou Next 5:00Explanation / Answer
Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 10-Jan Merchandise Inventory 144,000.00 Accounts Payable - Laine Co 144,000.00 (To record purchase of inventory) 9-Feb Accounts Payable - Laine Co 144,000.00 Notes Payable 144,000.00 (To record the issue of Note) 11-Mar Notes Payable 144,000.00 Interest Expense 840.00 $144,000 X 7% X 30/360 Cash 144,840.00 (To record the interest and note paid) 1-May Cash 160,800.00 Notes Payable 160,800.00 (To record the amount borrowed from Tabata Bank) 1-Jun Tools 100,470.00 $102,000 - $1,530 Interest Expense 1,530.00 $102,000 X 9% X 60/360 Notes Payable 102,000.00 (To record the tools purchased) 15-Jun Notes Payable 160,800.00 Interest Expense 1,608.00 $160,800 X 8% X 45/360 Notes Payable 160,800.00 Cash 1,608.00 (To record the interest paid and new Note issued to Tabata Bank) 30-Jul Notes Payable 160,800.00 Interest Expense 1,407.00 $160,800 X 7% X 45/360 Cash 162,207.00 (To record the interest paid and Note paid to Tabata Bank) 30-Jul Notes Payable 102,000.00 Cash 102,000.00 (To record the interest paid and Note paid to Gibala Co) 1-Dec Office Equipment 120,000.00 Cash 20,000.00 Notes Payable 100,000.00 (To record the purchase of office equipment) 15-Dec Litigation Loss 75,000.00 Litigation Claim Payable 75,000.00 (To record the settlement of Litigation) 31-Dec Notes Payable 10,000.00 Interest Payable 41.67 $10,000 X 5% X 30/360 Cash 10,041.67 (To record the note paid) Answer 2. Adjusting Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Dec Product Warranty Expense 15,300.00 Product Warranty Payable 15,300.00 (to record the warranty expense) 31-Dec Interest Expense 375.00 $10,000 X 5% X 30/360 X 9 Nos Interest Payable 375.00 (To record the interest accrued on Notes) Assuming 360 days in a year